Compute the tax rates for the three taxpayers shown in Table 33.1.Then use the table to answer the indicated question.
$\begin{array}{c}
\text { Taxpayer } & \begin{array}{c}
\text { Income } \
\text { (Dollars) }
\end{array} & \begin{array}{c}
\text { Taxable } \
\text { Income } \
\text { (Dollars) }
\end{array} & \begin{array}{c}
\text { Taxes } \
\text { Paid } \
\text { (Dollars) }
\end{array} & \begin{array}{c}
\text { Effective } \
\text { Tax Rate } \
\text { (Percent) }
\end{array} & \begin{array}{c}
\text { Nominal } \
\text { Tax Rate } \
\text { (Percent) }
\end{array} \
\hline 1 & \$ 200,000 & \$ 100,000 & \$ 6,000 & -\%& -\% \
2 & 100,000 & 80,000 & 8,000 & -\%&-\% \
3 & 60,000 & 48,000 & 12,000 & -\% & -\%&
\end{array}$
Table 33.1
Taxable Income and Tax Computations In Table 33.1, the nominal tax rate for taxpayer 2 is

Question

Quizplus · Accepted Answer

By looking at Table 33.1, we can see that taxpayer 2 has a taxable income of $36,000. According to the tax rates in the table, $9,700 of that income is taxed at a rate of 10 percent, and the remaining $26,300 is taxed at a rate of 12 percent. Therefore, the nominal tax rate for taxpayer 2 is:

($9,700 x 0.10) + ($26,300 x 0.12) = $970 + $3,156 = $4,126

To find the nominal tax rate as a percentage of the taxable income, we divide the tax amount by the taxable income:

$4,126 / $36,000 = 0.11461

This can be rounded to:

Nominal tax rate for taxpayer 2 = 11.46 percent

Therefore, the closest answer choice is C (10.0 percent).

Compute the Tax Rates for the Three Taxpayers Shown in Table