Suppose the tax rate on the first $10,000 of income is 0 percent; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on income over $60,000. Family A has an income of $55,000. What is the tax liability of Family A?

Question

Quizplus · Accepted Answer

The tax liability of Family A can be calculated as follows:
- The first $10,000 is tax-free
- The next $20,000 is taxed at 10%, which is $2,000
- The next $20,000 is taxed at 20%, which is $4,000
- The remaining $5,000 is taxed at 30%, which is $1,500

Therefore, the total tax liability for Family A is $7,500 (2,000 + 4,000 + 1,500).

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