Question

You have a job at a real-estate agency in the small country of Dystopia, where you are paid 72,000 marks (the currency of Dystopia) a year. You are now faced with the decision of whether to work a second job at the local university teaching a real-estate investing class, where the pay is 45,000 marks a year. Social insurance tax and income tax rates are listed below.

Social insurance taxes: 7.65% on your first 110,100 marks of total income

Income taxes:

Taxable income (in marks)	Tax rate
0–8,700	10%
8,700–35,350	15%
35,350–85,650	25%
85,650–178,650	28%

Part 3

Using the information above, what would be the total amount you pay in social insurance taxes on your second job? Give your answer to two decimals.
    

Part 2   (1 point)

What is your income tax bill for the second job? Give your answer to two decimals.
   

Part 3   (1 point)

What is your total tax bill for the new job? Give your answer to two decimals.
   

Answer 1

Suppose a person whose income is 72,000 conchs in the first job and 45,000 conchs in the second job a year.

Social insurance taxes: \(7.65 \%\) on your first 110,100 conchs of total income

Part 1:

Calculate social insurance taxes on the second job.

\(\begin{aligned} \text { social insuranc etax } &=7.65 \% \text { of }(110,100-72,000) \\ &=7.65 \% \times(38,100) \\ &={2,914.65 \text { conchs }} \end{aligned}\)

Thus, the social insurance tax on the second job is 2,914.65 conchs. 

Part 2:

For taxable income \(35350-85650,\) the tax rate is \(25 \%\).

For taxable income \(85650-178650,\) the tax rate is \(28 \%\).

Part of income of second job will be taxed at \(25 \%\) that is \(85,650-72,000=13,650\) conchs. This amount is part of the second job's income is taxed at the rate of \(25 \%\).

The remaining part of the second job's income will be taxed at the rate of \(28 \%\) that is \(45,000-13,650=31,350\) conchs.

Calculate the total income tax for second job he owns as follows:

$$\begin{aligned} \text { total income tax } &=25 \%(85,650-72,000)+28 \%(45,000-13650) \\ &=3,412.5+8,778 \\ &=12,190.5 \text { conchs } \end{aligned} $$

Thus, total income tax on second job is 12,190.5 conchs

Part 3:

Total tax bill on second job is \(2,914.65+12,190.5=15,105,15\) conchs