Larry faces a progressive tax structure that has the following marginal tax rates: 0 percent on the first $10,000,10 percent on the next $10,000,15 percent on the next $10,000,25 percent on the next $10,000,and 40 percent on all additional income.If Larry earns $75,000,what is his average tax rate
A)20 percent
B)25.33 percent
C)30 percent
D)36.67 percent

Question

Quizplus · Accepted Answer

The average tax rate is the total tax paid divided by the total income. Larry's total tax paid is $10,000 x 0% + $10,000 x 10% + $10,000 x 15% + $10,000 x 25% + $25,000 x 40% = $15,500. His average tax rate is $15,500 / $75,000 = 25.33%.

Larry Faces a Progressive Tax Structure That Has the Following