Suppose the government taxes 10 percent of the first $30,000 in income, 20 percent of the next $20,000 in income, and 30 percent of all income over $50,000 . Calculate the marginal tax rate and the average tax rate for a person who earns $70,000
The marginal tax rate would be 30 percent because the person earns more than $50,000 . The average tax rate would be 18.6%. The person pays $3,000 on the first $30,000 of income, $4,000 on the next $20,000 in income, and $6,000 on the remaining $20,000 of income. $13,000/$70,000=18.6%.
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a. True b. False
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a. i and ii b. i but not ii c. ii but not i d. neither i nor ii