Corporation Growth has $81,000 in taxable income, and Corporation Income has $8,100,000 in...


Corporation Growth has $81,000 in taxable income, and Corporation Income has $8,100,000 in taxable income. Use the tax rates from Table 2.3.

a.What is the tax bill for each firm? (Do not round intermediate calculations. Enter your answers in dollars, not millions of dollars, e.g., 1,234,567.)

Firms Tax Bill
Corporation Growth $
Corporation Income $

b. Suppose both firms have identified a new project that will increase taxable income by $15,000. How much in additional taxes will each firm pay? (Do not round intermediate calculations.)

Firms Additional taxes
Corporation Growth $
Corporation Income $

Taxable Income Tax Rate
$ 0-50,000 15%
50,001-75,000 25
75,001-100,000 34
100,001-335,000 39
335,001-10,000,000 34
10,000,001-15,000,000 35
15,000,001-18,333,333 38
18,333,334 35

Progressive Tax Brackets:

Progressive tax schedules are necessary for fair and equitable taxation. Understanding how they work is fundamental to develop a sensible business strategy.

Answer and Explanation:

The key point to understand about a progressive tax schedule is that once income rises above the upper limit of one bracket, only the income above...

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