Assume that you have a marginal tax rate of 28 percent,a state income tax rate of 4 percent,and have a city income tax rate of 1 percent.The tax for Social Security and Medicare is 7.65 percent.What would be the effective marginal tax rate on your last dollar of earnings?

Question

Quizplus · Accepted Answer

To calculate the effective marginal tax rate, we need to add up all the taxes that would be paid on the next dollar of earnings, which are:

- Federal income tax: 28%
- State income tax: 4%
- City income tax: 1%
- Social Security and Medicare tax: 7.65%

Therefore, the effective marginal tax rate would be:

28% + 4% + 1% + 7.65% = 40.65%

So, the correct answer is D, 40.65%.

Assume That You Have a Marginal Tax Rate of 28