Refer to Scenario 19.1 below to answer the question(s) that follow.
SCENARIO 19.1: An individual earning $60,000 pays $12,000 in taxes. The marginal tax rate on any income earned above $60,000 is 25%.
-Refer to Scenario 19.1. When this person earns $70,000, her average tax rate is

Question

Quizplus · Accepted Answer

The individual initially pays $12,000 on $60,000, which is a 20% average tax rate. For the additional $10,000 earned, they pay 25%, or $2,500. The total tax on $70,000 is $14,500. The average tax rate is $14,500/$70,000 = 20.7%.