Question

Check my work Using Table 3.6, calculate the marginal and average tax rates for a single taxpayer with the following incomes: (Do not round intermediate calculations. Round your answers to 1 decimal place.) Marginal Tax Rate Average Tax Rate points a. b. c. d. $ $ $ $ Income 29,000 68,000 318,000 4,800.000 eBook Ask References

Answer 1

	Income	Marginal Tax rate	Average Tax rate
a.	$                                29,000	12%	11.3%
b.	$                                68,000	22%	16%
c.	$                            3,18,000	35%	27.4%
d.	$                          48,00,000	37%	36.3%
	Workings:
a.	Taxable Income	=	$                                             29,000
	Computation of tax payable:
	On first $9525	=	$9525 X 10%	=	$             953
	On next $19475	=	$19475 X 12%	=	$         2,337
	Tax payable	=			$         3,290
	Average Tax rate	=	Tax payable / Taxable income
		=	$3290 / $29000
		=	11.3%
	Marginal Tax rate	=	12%
b.	Taxable Income	=	$                                             68,000
	Computation of tax payable:
	On first $9525	=	$9525 X 10%	=	$             953
	On next $29175	=	$29175 X 12%	=	$         3,501
	On remaining $29300	=	$29300 X 22%	=	$         6,446
	Tax payable	=			$       10,900
	Average Tax rate	=	Tax payable / Taxable income
		=	$10900 / $68000
		=	16.0%
	Marginal Tax rate	=	22%
c.	Taxable Income	=	$                                         3,18,000
	Computation of tax payable:
	On first $9525	=	$9525 X 10%	=	$             953
	On next $29175	=	$29175 X 12%	=	$         3,501
	On next $43800	=	$43800 X 22%	=	$         9,636
	On next $75000	=	$75000 X 24%	=	$       18,000
	On next $42500	=	$42500 X 32%	=	$       13,600
	On remaining $118000	=	$118000 X 35%	=	$       41,300
	Tax payable	=		=	$       86,990
	Average Tax rate	=	Tax payable / Taxable income
		=	$86990 / $318000
		=	27.4%
	Marginal Tax rate	=	35%
d.	Taxable Income	=	$                                       48,00,000
	Computation of tax payable:
	On first $9525	=	$9525 X 10%	=	$             953
	On next $29175	=	$29175 X 12%	=	$         3,501
	On next $43800	=	$43800 X 22%	=	$         9,636
	On next $75000	=	$75000 X 24%	=	$       18,000
	On next $42500	=	$42500 X 32%	=	$       13,600
	On next $300000	=	$300000 X 35%	=	$   1,05,000
	On remaining $4300000	=	$4300000 X 37%	=	$ 15,91,000
	Tax payable	=		=	$ 17,41,690
	Average Tax rate	=	Tax payable / Taxable income
		=	$1741690 / $4800000
		=	36.3%
	Marginal Tax rate	=	37%