How to calculate tax

Question

If at 139,0007€, the tax burden is 35000€. What is the tax if at 122,000€

Answer 1

Hello Diane,

This problem requires you to approach the issue in reverse of how tax is normally calculated.

Normally the formula to figure out tax is:

Cost X Tax Rate = Tax

However in this question we are only given the cost and the tax. So before we can figure out the tax at122,000 we first need to identify the tax rate. We will need to manipulate the formula above to get the Tax Rate:

Tax Rate = Tax/Cost

25.179856% = 35000€/139,0007€

Now that we have the tax rate we can plug in our variables to the original formula:

Cost X Tax Rate = Tax

122,000€ X 25.179856% = 30,719.42 (rounded)