The government uses part of payroll taxes to pay for Social Security. Consider f

Question

The government uses part of payroll taxes to pay for Social Security. Consider four workers: Mark, Jim, Paul, and Sean. The table shows their labor income and the amount they pay in taxes to fund Social Security. Calculate the Social Security average tax rate for each worker and complete the table below. (Enter your answers rounded to one decimal place.) Social Labor Security Average Income (Tax paid) Tax Rate percent) Worker (dollars) (dollars) Mark $35,000 $2,170 Jim 60,000 3,720 Paul 120,000 7,347 Sean 145,000 7,347 The Social Security tax is select.

Explanation / Answer

Average tax rate = Total tax paid / Income * 100

For Mark : 2170/35000 * 100 = 6.2%

Similarly , for Jim = 6.2%

Paul = 6.12% (approx)

Sean = 5.07% (approx)

The social security tax is : Total Tax / Total Income * 100 = 20,584/3,60,000 * 100 = 5.72 % ( approx)

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