Suppose the tax rate on the first $10,000 of income is zero;10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on income over $70,000.Family C has an income of $100,000.What is family C's average tax rate?

Question

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Family C's income is $100,000. The tax calculation is as follows: $0 for the first $10,000; 10% of $20,000 is $2,000; 20% of $20,000 is $4,000; 30% of $20,000 is $6,000; and 40% of $30,000 (the amount over $70,000) is $12,000. The total tax is $2,000 + $4,000 + $6,000 + $12,000 = $24,000. The average tax rate is the total tax divided by total income: $24,000 / $100,000 = 0.24 or 24%.

Suppose the Tax Rate on the First $10,000 of Income