If taxable income is over-- But not over-- The marginal tax rate for the bracket
ID: 1187503 • Letter: I
Question
If taxable income is over--
But not over--
The marginal tax rate for the bracket is:
$0
$11,000
9%
$11,000
$43,000
14%
$43,000
$105,000
24%
$105,000
$260,000
35%
$260,000
No limit
45%
i) Using the table above, what would his total tax payment be?
ii) What would his average tax rate be? Please round your answer to the nearest 10th of a percent.
i) Using the table above, what would her total tax payment be?
ii) What would her average tax rate be? Please round your answer to the nearest 10th of a percent.
If taxable income is over--
But not over--
The marginal tax rate for the bracket is:
$0
$11,000
9%
$11,000
$43,000
14%
$43,000
$105,000
24%
$105,000
$260,000
35%
$260,000
No limit
45%
Explanation / Answer
$120,000
Total tax = 0.09*11000 + .14*32000 + .24*62000 + .35*15000 = 25600
Average tax rate = 25600/120000 = 21.33%
$75000
Total tax = 0.09*11000 + .14*32000 + .24*32000 = 13150
Average tax rate = 13150/75000 = 17.53%
As the tax rate is increasing with increase in income and is divided into brackets unlike proportional tax system where tax is imposed on per unit of additional income, it is an example of progressive tax.
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