Question

A.) if your income is 60,000, how much will you pay in taxes.

B.) determine marginal tax rate.

C.) determine your average tax rate.

Suppose in Fiscalville there is a O percent tax on the first $10,000 of income, but a 15 percent tax on earnings between $10,000 and $20,000 and a 30 percent tax on income between $20,000 and $30,000 Any income above $30,000 is taxed at 45 percent. Instructions: Round your answers to the nearest whole number a. If your income is $60,000, how much will you pay in taxes? b. Determine your marginal tax rate. 45 percent c. Determine your average tax rate percent

Answer 1

a)

Tax on $ 60,000 = 0 + 0.15 x ( $ 20,000 - $ 10,000 ) + 0.30 x ( $ 30,000 - $ 20,000) + 0.45 x ( $ 60,000 - $ 30,000)

Tax payable = 0 + $ 1500 + $ 3000 + $ 13,500

Tax payable = $ 18,000

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b) The marginal tax rate is the extra taxes paid on an additional dollar of income

The marginal tax rate = 45%

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c)

Average tax rate = Total taxes paid $\div$ Total income

Average tax rate = $ 18,000 $\div$ $ 60,000

Average tax rate = 30%