What is the income after tax and benefits of the third 20 percent of households?

Question

What is the income after tax and benefits of the third 20 percent of households?

The income after tax and benefits of the third 20 percent of households is ____ million.

The table shows the distribution of market income in an economy and how the government redistributes income by collecting income taxes and paying benefits Market income Income Benefits tax (millions of (millions of dollars) (percent) dollars) Households What is the income after tax and benefits of the third 20 percent of households? 10 Lowest 20 percent Second 20 percent Third 20 percent Fourth 20 percent Fifth 20 percent 10 20 40 12 0 0 56 The income after tax and benefits of the third 20 percent of households is $ million >Answer to 1 decimal place

Explanation / Answer

Third 20 percent of the household receive an income of 12 million of dollars. Out of this income, the income tax they pay is 10 percent. Hence the disposable income is 12(1-10%) = 10.8 million of dollars. The benefits they receive as a result of tax distribution is 8 million of dollars.

Hence the income after tax and benefits of the third 20 percent of households is (10.8 + 8) = 18.8 million of dollars.

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