Assume Juno's paid $368,060 in taxes on taxable income of $1,673,000 last year.This year,the firm paid $401,545 in taxes on taxable income of $1,818,586.Assume the tax rates were the same for both years.What are the marginal and average tax rates for this year?

Question

Quizplus · Accepted Answer

To find the marginal tax rate, we need to calculate the change in taxes divided by the change in taxable income.

Marginal tax rate = (Current year taxes - Previous year taxes) / (Current year taxable income - Previous year taxable income)

= ($401,545-$368,060) / ($1,818,586-$1,673,000)

= $33333 / $145586 = 0.229 or 22.9%

To find the average tax rate, we need to divide the total taxes paid by the total taxable income.

Average tax rate = Current year taxes / Current year taxable income

= $401,545 / $1,818,586

= 0.221 or 22.1%

Therefore, the answer is (C) 23 percent; 22 percent.

Assume Juno's Paid $368,060 in Taxes on Taxable Income of $1,673,000