Annual income of a person is increased by 30% but rate of income tax is decreased by 20%.Find the effect of this on his tax liability?2%3%4%5%

To solve this problem, we need to consider two factors: the increase in annual income and the decrease in the income tax rate.

Step 1: Increase in Annual Income Let's assume the initial annual income of the person is $100 (for simplicity). A 30$130.

Step 2: Decrease in Income Tax Rate Next, let's assume the initial rate of income tax is 10% (again, for simplicity). A 20% decrease would make the new tax rate 8%.

Step 3: Calculate Tax Liability Initially, the person's tax liability would be 10% of $100, which is$10. After the changes, the tax liability would be 8% of $130, which is$10.40.

Step 4: Find the Effect on Tax Liability To find the effect on tax liability, subtract the initial tax liability from the new tax liability: $10.40 -$10 = $0.40.

So, the person's tax liability has increased by $0.40. To express this as a percentage of the initial tax liability, divide$0.40 by $10 and multiply by 100, which gives 4%.

Therefore, the effect of the increase in annual income and decrease in income tax rate on the person's tax liability is an increase of 4%.