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

Question

Quizplus · Accepted Answer

First $20,000 = 0% tax
Next $15,000 = 10% tax
Total tax paid = ($20,000 x 0%) + ($15,000 x 10%) = $1,500
Average tax rate = Total tax paid / Total income = $1,500 / $35,000
= 4.3%

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