Suppose the tax amount on the first $10,000 income is $0; $2000 on the next $20,000; $4000 on the next $20,000; $6000 on the next $30,000; and 40 percent on any income over $80,000. Family A has income of $30,000 and Family B has income of $80,000. What is the marginal and average tax rate for each family?
A) Family A: marginal-10 percent; average-6.7 percent; Family B: marginal-30 percent; average-15 percent.
B) Family A: marginal-10 percent; average-20 percent; Family B: marginal-30 percent; average-23 percent.
C) Family A: marginal-10 percent; average-10 percent; Family B: marginal-40 percent; average-40 percent.
D) Family A: marginal-10 percent; average-15 percent; Family B: marginal-40 percent; average-20 percent.
Correct Answer:
Verified
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