Exhibit 9-1
A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%.
-Refer to Exhibit 9-1. If you were earning $100,000 a year, your average tax rate would be:

Question

​Exhibit 9-1
A flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages. Assume that the flat tax rate is 12%.
-Refer to Exhibit 9-1. If you were earning $100,000 a year, your average tax rate would be:

Quizplus · Accepted Answer

Under the flat tax plan described, you would deduct the standard allowance of $25,000 from your wages, leaving $75,000 taxable. At a 12% tax rate, you would pay $9,000 in taxes ($75,000 * 12%). To find the average tax rate, divide the tax paid by your total earnings: $9,000 / $100,000 = 9%.

​Exhibit 9-1 A Flat Tax Plan Allows Individuals to Deduct a Standard

Exhibit 9-1 A Flat Tax Plan Allows Individuals to Deduct a Standard