okay...i'm going to set you straight...alot of what scorp said is just plain wrong.
1. Each +1 to happiness gives my citizens 2 currency units worth of gross (pre-tax) income. Correct?
Correct. In addition, each happiness point gives $2 BEFORE multipliers
2. Assuming 1, above, is correct, at max tax rate of 28%, that means each +1 happiness gives me + .56 currency units of tax money. Correct?
Correct, provided you have no income-modifying improvements/wonders.
3. If I get an improvement such as a bank, that gives me +7% to my citizens daily income, that means its giving me +7% of their gross income (pre-tax), correct?
Correct. like- and unlike-rules apply, but generally, you're right.
4. How are multiple bonuses to daily income calculated? Lets say without bonuses, my citizens earn 20 currency units a day and I have 2 +7% bonuses. Are my citizens earning 20 * 1.07 * 1.07 = 22.898 daily (ie bonuses are multiplicative), or are they earning 20 + (20*0.07) + (20*0.07) = 20 + 1.4 + 1.4 = 22.8 daily (ie bonuses are additive)?
like-bonuses add and unlike-bonuses multiply. if it has the same name, it is like.
in your example the equation would be like this:
$20 * (1 + 0.07 * 2)
this is the full calculation:
Base Income * (1 + # of Banks * 0.07) * (1 + # of Schools * 0.05) * (1 + # of Universities * 0.08) * (1 + # of Foreign Ministries * 0.05) * (1 + # of Harbors * 0.01)
5. Assuming that bonus income is some sort of multiplier on some sort of base daily income, how do I find out my base daily income per citizen? Is it just Happiness level * 2?
to find your base income, simply 'divide off' your bonuses. so, with the same example as above, you would take your daily income and simply divide it by 1.14.
also, please stop saying currency units. its annoying to read. everyone uses the term dollar universally here.
ps
"Now lets say I have a church which says "Church - $40,000.00 - Increases population happiness +1." You are saying that its not actually increasing my happiness level, its increasing the amount of money I get per happines value?"
It sounds like he IS saying that getting more happiness affects the base happiness bonus, in that case, he would be wrong.