Tax

Discussion in 'Math' started by Lightfire, Dec 23, 2011.

  1. Lightfire

    Thread Starter Well-Known Member

    Oct 5, 2010
    690
    21
    Hello,

    for example I am selling something (which is 5,000)... but there will be a tax of 5%. Now if I will sell it 5,000, I will only get 4750.
    But I want to get exactly 5,000. I know I should sell it more than 5,000 to get exactly 5,000..

    But I want to know how....... i hope you understand what i say...
     
  2. steveb

    Senior Member

    Jul 3, 2008
    2,433
    469
    Yes, I understand. You want to bribe the tax man.

    In order for a dishonest tax man to have a working scheme, he must create a win/win situation and allow you to pay less than the fair tax. Since you will both be equally guilty when convicted, you must share the benefit equally. Hence, pay him 2.5 %.

    This means you must charge $5000/0.975=$5128.21.

    But, thinking further, because you have determined your net amount already, the person you are selling to will benefit - not you. So, there is no sense taking risk for his benefit. OK, be honest and charge $5000/0.95=%5263.16.

    You see the pattern now. Right?

    selling_price = (amount_you_want)/(1-tax_rate)
     
  3. Lightfire

    Thread Starter Well-Known Member

    Oct 5, 2010
    690
    21
    Thanks steveb
     
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