Tim earns income of $60,000 per year and pays $21,000 per year in taxes. Tim paid 20 percent in taxes on the first $30,000 he earned. What was the marginal tax rate on the second $30,000 he earned?
A)20 percent
B)30 percent
C)50 percent
D)70 percent

Question

Quizplus · Accepted Answer

Tim paid $6,000 (20% of $30,000) on the first $30,000. He paid a total of $21,000 in taxes, so he paid $15,000 on the second $30,000. The marginal tax rate on the second $30,000 is $15,000/$30,000 = 50%.

Tim Earns Income of $60,000 Per Year and Pays $21,000