Suppose the government taxes 10 percent of the first $20,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $40,000 . Calculate the marginal tax rate and the average tax rate for a person who earns $100,000
The marginal tax rate would be 30 percent because the person earns more than $40,000 . The average tax rate would be 24%. The person pays $2,000 on the first $20,000 of income, $4,000 on the next $20,000 in income, and $18,000 on the remaining $60,000 of income. $24,000/$100,000=24%.
You might also like to view...
Combinations to the left of the budget line are:
A. Unavailable and inefficient B. Unattainable and efficient C. Attainable and inefficient D. Attainable and efficient
How do perfectly competitive markets allow for the movement of resources from less productive industries to more productive industries?
What will be an ideal response?
You can capture a bigger piece of the pie if
a. You can decrease your counter party's gains from reaching an agreement b. You can increase you gain from reaching an agreement c. All of the above d. None of the above
Assume that the exchange rate changed from (a) $2/€ to (b) $1.125/€. What are the corresponding exchange rates for the U.S. dollar?
a. (a) €2/$ and (b) €1.125/$. b. (a) €1.125/$ and (b) €2/$. c. (a) €0.50/$ and (b) €0.89/$. d. There is not enough information provided to answer this question.