Assume that in year 1 your average tax rate is 20 percent on a taxable income of $20,000.If the marginal tax rate on the next $10,000 of taxable income is 30 percent,what will be the average tax rate if your taxable income rises to $30,000?

Question

Quizplus · Accepted Answer

Using the information given, we calculate that the total taxes paid on $30,000 of income would be $7,000. Dividing that by $30,000 gives an average tax rate of 23.3%. Therefore, the closest answer choice is D - about 23 percent.

Assume That in Year 1 Your Average Tax Rate Is