A deliberately hypothetical tax table
A classroom case supplies a simplified tax rule solely for the exercise: the first ten million units of taxable income are taxed at ten percent and any amount above that threshold is taxed at twenty percent. A person has fourteen million units before a permitted two-million-unit deduction and qualifies for a one-hundred-thousand-unit tax credit. The exercise does not describe the current Korean tax schedule, statutory deductions or any real taxpayer’s eligibility. A learner first subtracts the credit from income and then taxes the entire remainder at the highest rate. The instructor asks for a correct ordered calculation and an explanation of why the supplied assumptions must remain separate from current tax law.
1. Compute tax under the stated exercise rules.
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After the deduction, taxable income is 12,000,000. Tax before credit is 10,000,000 × 10% + 2,000,000 × 20% = 1,400,000. After the 100,000 credit, tax is 1,300,000 units.
2. Identify the learner’s mistakes.
Read the worked answer
A credit reduces calculated tax, not taxable income in this exercise. The higher marginal rate applies only to the amount in its band, not the entire taxable base.