Taxable income Tax Rate 10,000,001-15,000,000 35 Suppose a firm earns $12,000,00

ID: 2652533 • Letter: T

Question

Taxable income Tax Rate

10,000,001-15,000,000 35

Suppose a firm earns $12,000,000 in taxable income. Which of the following is correct about the firm’s marginal and average tax rates?

Select one:

a. The average tax rate is 34.17% and the marginal tax rate is 35%

b. The average tax rate is 29.67% and the marginal tax rate is 34%

c. The average tax rate is 29.67% and the marginal tax rate is 34.17%

d. The average tax rate is 35% and the marginal tax rate is 34%

e. The average tax rate is 35% and the marginal tax rate is 35%

Suppose a firm earns $12,000,000 in taxable income

Firm’s marginal tax rate = 35%

Firm’s average tax rates = (50000*15%+25000*25%+25000*34%+235000*39%+665000*34% + 200000*35%)/12000000

Firm’s average tax rates = 34.17%

Answer

a. The average tax rate is 34.17% and the marginal tax rate is 35%

Taxable Income Tax Rate $0 - 50000 15% 50001 - 75000 25% 75001- 100000 34% 100001- 335000 39% 335001- 1000000 34% 10,000,001 - 15,000,000 35%

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