Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of...

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Suppose the government taxes 10 percent of the first $30,000 in income and 20 percent of all income over $30,000. Calculate t

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Answer 1

Answer #1

Marginal Tax

First 30,000 @ 10% = 3000

Next 40,000 ( 70,000 - 30,000) @ 20% = 8000

Total Tax = $3000 + $8000 = $11000

Marginal Tax Rate = 10% + 20% = 30%

Average Tax Rate = (11000/70000) * 100 = 15.71%

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Answer 2

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