The table below shows an income tax schedule for the imaginary country of Indepe

Question

The table below shows an income tax schedule for the imaginary country of Independence. Connor is a citizen of Independence who earns dollar 95,000 per year at his job. Assume Connor is not eligible for any deductions or exemptions. Connor pays dollar n/_r in income tax. Connor's marginal tax rate is 15.0 percentage. Connor's overall tax rate is n/r percentage. Connor isn't crazy about his job and wants to move to a job in a related industry that pays dollar 100,000. With his new job, Connor will have to pay dollar 11500.0 in taxes. The income tax in Independence is progressive.

Explanation / Answer

Compute the amount of tax with the given salary of $95,000 as:

Total tax = 5000*0.05 + 10000*0.07 + 15000*0.09 + 20000*0.11 + 25000*0.13 + (95000 - 75000)*0.15

= 250 + 700 + 1350 + 2200 + 3250 + 3000

= $10750

Average or overall tax rate = Tax paid/ Total income = 10750/95000 = 11.3%

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