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Suppose you buy a share of stock at a price of $100 and a year later it is worth $125. Suppose further that the rate of inflation for the year is 10%. If you are subject to a 15% capital gains tax, how much is your total tax burden

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dubeyshailja64

The total tax burden will be calculated as  $3.75

What is inflation?

When the prices  of products and services increases with a given duration of time and which result increase in the cost of living is refers as situation of inflation.

To find the total tax burden-

Current value of stock=$100

After one year, value of stock=$125

To find the profit gain after one year,

$125—$100 = $25

This $25 will be considered as capital gain over stock.

Rate of tax over capital gain=15%

Total tax burden =capital gain×rate of tax on capital gain

                            =$25×15%

                            =$3.75

Therefore, the total tax burden will be $3.75.

Learn more about inflation, here:

brainly.com/question/18072639

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