Answer:
a) $18333.33 has been paid more as income tax
b) True
Explanation:
Given:
Current Taxable income earned = $275,000
Current Tax rate = 20%
Current tax amount = $55,000
Therefore,
The current after tax income = Taxable income - Tax paid
or
The current after tax income = $275,000 - $55,000 = $220,000
Now,
After-tax income = Pretax income (1 – tax rate)
or
$220,000 = Pretax income (1 - 0.25)
or
Pretax income = $293333.33
Therefore, the tax paid = Pretax income - after tax income
the tax paid = $293333.33 - $220,000 = $73333.33
b) True. the tax collected has increased by ( $73333.33 - $55,000 )
= $18333.33
