Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $30,000?
A)both are 10 percent
B)10 percent and $2,000, respectively
C)$3,000 and 10 percent, respectively
D)$3,000 and 20 percent, respectively

Question

Quizplus · Accepted Answer

The tax liability is $3,000 (10% of $30,000), and the marginal tax rate is 10% because the income is within the first $40,000 bracket.

Suppose the Government Imposes a Tax of 10 Percent on the First