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Two years ago, Adrienne and William earned $90,450 and paid $10,854 in income ta

ID: 1222695 • Letter: T

Question

Two years ago, Adrienne and William earned $90,450 and paid $10,854 in income tax. Last year, the couple earned $97,770 and paid $15,632 in income tax.

a. Which of the following statements is true regarding the tax payments?

b. This example illustrates:

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Can someone please explain this??

Both the actual tax payment and the tax rate were higher last year than in the previous year. The actual tax payment was higher last year, but the tax rates cannot be computed without more information. The actual tax payment was higher last year, but the tax rates were the same. The actual tax payment was higher last year and the couple's disposable income was smaller.

Explanation / Answer

% of tax in first year=10854/90450=0.12%
second year=15632/97770=0.159885445=15.99%

Q a) answer
Both the actual tax payment and the tax rate were higher last year than in the previous year.
Q b)
answer
the stabilizing properties of the U.S. tax system.