Suppose the income tax rate is 0% on the first $20,000,20 percent on the next $20,000,30 percent on the next $20,000,40 percent on the next $20,000,and 50 percent on all income over that.The Arm family has a taxable income of $80,000.What is the average tax rate for this family?

Question

Quizplus · Accepted Answer

The Arm family's total tax can be calculated as follows: 0% on the first $20,000 = $0, 20% on the next $20,000 = $4,000, 30% on the next $20,000 = $6,000, 40% on the next $20,000 = $8,000, and 50% on income over $80,000 = $0 (since their income is $80,000). The total tax is $0 + $4,000 + $6,000 + $8,000 = $18,000. The average tax rate is the total tax divided by total income: $18,000 / $80,000 = 0.225 or 22.5%.

Suppose the Income Tax Rate Is 0% on the First