Answer:
It will require an income for 80,556 before taxes
Explanation:
Fiorst, we will calculate the current tafter tax income:
72,500 x 20% = 14,500 tax expense
72,500 - 14,500 = 58,000 after-tax income
Now, we will calculate the pre-tax income to keep the same after-tax income with the new rate:
pretax income x ( 1 - new tax rate) = 58,000
pretax income x ( 1 - 0.28) = 58,000
pretax income = 58,000/0.72 = 80,555.56
At this level, Mr E will obtain the same after-tax income
