Suppose the tax rate on the first $20,000 of income is 0%; 10% on the next $20,000 earned; and 20% on any additional income earned. The average tax rate for a person earning $35,000 is:

Question

Quizplus · Accepted Answer

The first $20,000 of income is taxed at a rate of 0%, so no tax is paid on that amount. 
The next $15,000 of income is taxed at a rate of 10%, so the tax paid on that amount is 0.10 x 15,000 = $1,500. 
Therefore, the total tax paid on an income of $35,000 is $1,500. 
The average tax rate is calculated by dividing the total tax paid by the total income, so the average tax rate for a person earning $35,000 is: 
1,500 / 35,000 x 100% = 4.3%. 
Therefore, the answer is C.

Suppose the Tax Rate on the First $20,000 of Income