action Aplia: Student Question C Suppose You Are A Typical Per... C Some States
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action Aplia: Student Question C Suppose You Are A Typical Per... C Some States Exclude Necessitie.. f tax pa ls Help aded Assignment | Back to Assignment Due Sunday 11.05.17 at 11 Attempts: 8. Problems and Applications Q2 Suppose you are a typical person in the U.S. economy. You pay 4 percent of your income in a state income tax and 15.3 percent of your labor earnings in federal payroll taxes (employer and employee shares combined). You also pay federal income taxes as in the following table: On Ta From $0 to $9,075 From $9,076 to $36,900 From $36,901 to $89,350 From $89,351 to $186,350 From $186,351 to $405,100 From $405,101 to $406,750 From $406,751 and above The Tax Rate Is... 10.0% 15.0% 25.0% 28.0% 33.0% 35.0% 39.6%Explanation / Answer
For an income of 30,000 $:
State income tax: 4 % of earnings: which is equal to 4/100*30000=1200$
Federal payroll tax: 15.3 % of earnings: which is equal to : 15.3/100*30000=4590$ (Employer and employees shares are not given hence consider employee contribution )
Income tax: 10/100*9075+15/100*20926 =4046.1$
Total tax paid by employee: 1200+4590+4046.1= 9836.1$
Therefore average tax rate is : total tax paid/ total income = 9836.1/30000=32.78 %
Marginal tax rate: tax rate paid on additional income: 15%
For an income of 60,000 $:
State income tax: 4 % of earnings: which is equal to 4/100*60000=2400$
Federal payroll tax: 15.3 % of earnings: which is equal to 15.3/100*60000=9180$ (Employer and employees shares are not given )
Income tax: By using slab wise method as shown earlier =10856.25$
Total tax paid by employee: 2400+9180+10856.25=22436.25
Therefore average tax rate is : total tax paid/ total income = 22436.25/60000=37.39%
Marginal tax rate: tax rate paid on additional income: 25%
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