Question

The following table details the working populations, income tax rates, and average salary (in equivalent US dollars) for Peru and Chile.

Country
Workforce
Average Salary ($)
Income Tax Rate
Peru
10,618,704
8,714
24.1%
Chile
7,210,595
14,622
31.4%

Based on the information in the table, how do the annual tax revenues of Peru and Chile compare to one another?
a.
Peru collects $294,980 more than Chile.
b.
Peru collects $63,408,109 more than Chile.
c.
Chile collects $12,901,933,434 more than Peru.
d.
Chile collects $10,805,998,234 more than Peru.

Answer 1

Compute total tax = workforce × average salary × tax rate.

Peru:
10,618,704 × 8,714 = 92,531,386,656 total wages
92,531,386,656 × 0.241 = 22,300,064,184.10

Chile:
7,210,595 × 14,622 = 105,433,320,090 total wages
105,433,320,090 × 0.314 = 33,106,062,508.26

Difference (Chile − Peru) ≈ 33,106,062,508.26 − 22,300,064,184.10 = 10,805,998,324.16

Closest answer: d. Chile collects $10,805,998,234 more than Peru.