Question

Wilbur has been offered a job at a salary that would put him in the 24% marginal tax bracket. In addition to his salary, he would receive health insurance coverage. Another potential employer does not offer health insurance but has agreed to match the first offer on an after tax and insurance basis. The cost of the health insurance comparable to that provided by the other potential employer is $9,000 per year. How much more in salary must the second potential employer pay so that Wilbur’s financial status will be the same under both offers?

THIS IS THE ANSWER : The additional before-tax salary that is required to purchase the health insurance for $9,000, when the marginal tax rate is 24%, is $11,842 [$9,000/(1 − .24)]. This assumes that Wilbur will not be able to deduct the insurance as a medical expense because of the adjusted gross income floor and/or the standard deduction

Answer 1

The question is that what would be the break even point for both employer as Ist employer is offering health insuarance while the other won't offer the same. Now, the Wilbur comes under 24% marginal tax bracket, hence second employer must offer that much increase in salary that after tax, Wilbur gets $9000 which he is getting in form of insurance from Ist employer.

The answer has been given assuming that Insurance expense are not tax deductible i.e. tax is to be paid over the amount being offered by the second employer.