Government G levies an income tax with the following rate structure: Percentage
ID: 1133986 • Letter: G
Question
Government G levies an income tax with the following rate structure: Percentage Rate Bracket 10 20 28 Income from -0-to $30,000 Income from $30,001 to $70,000 Income from $70,001 to $200,000 Income in excess of $200,000 te A's tax and average tax rate. What is A's marginal tax rate? b. Taxpayer B's taxable income is $611,600. Compute B's tax and average tax rate. What is B's marg Complete this question by entering your answers in the tabs below. Required A Required B Taxpayer A's taxable income is $172,100. Compute A's tax and average tax rate. What is A's marginal tax rate? (Round your percentage answers to 2 decimal places and other answers to the nearest whole dollar amount.) Income tax Average tax rate Marginal tax rate Required BExplanation / Answer
A's Tax is computed as follows :-
6% of 30,000 = $1800
10% of 40,000 = $4000
20% of 102100 = $20420
Total Tax = $1800 + $4000 + $20420 = $26,220
Average Tax Rate for A = (26220/172100)*100 = 15.24%
Marginal tax rate is the extra tax paid on additional dollar of income. In this case, the mrginal tax rate for A is 20% since for any extra dollar of income, the person has to pay 20% tax.
B's Tax is computed as follows :-
6% of 30,000 = $1800
10% of 40,000 = $4000
20% of 130000 = $26000
28% of 411600 = $115248
Total Tax = $1800 + $4000 + $26000 + $115248 = $147048
Average Tax Rate for B = (147048/611600)*100 = 24.04%
Marginal tax rate for B is 28% since any extra dollar earned will attracted tax of 28% (top tax backet in given example).
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