Scenario 12-4
A taxpayer faces the following tax rates on her income:
20 percent of the first $40,000 of her income;
30 percent of all her income above $40,000.
-Refer to Scenario 12-4. The taxpayer faces
A)an average tax rate of 22.5 percent when her income is $30,000.
B)an average tax rate of 22.0 percent when her income is $50,000.
C)a marginal tax rate of 10 percent when her income rises from $40,000 to $40,001.
D)a marginal tax rate of 50 percent when her income rises from $60,000 to $60,001.

Question

Quizplus · Accepted Answer

When the taxpayer's income is $50,000, she pays 20% on the first $40,000 ($8,000) and 30% on the next $10,000 ($3,000), totaling $11,000 in taxes. The average tax rate is $11,000/$50,000 = 22%.

Scenario 12-4 A Taxpayer Faces the Following Tax Rates on Her Income