Average versus Marginal Tax Rate: Suppose Franklin Corporation had pre-tax income of $300,000 in 2010 and that the firm would have paid $100,250.00 in federal income taxes. What is Franklin's average income tax rate? (Round off to the nearest 0.1%)

Question

Quizplus · Accepted Answer

To find the average income tax rate, we divide the total income tax paid by the pre-tax income:

Average tax rate = (Total income tax paid / Pre-tax income) x 100

Average tax rate = ($100,250 / $300,000) x 100

Average tax rate = 33.4%

Therefore, the best choice is C.

Average Versus Marginal Tax Rate: Suppose Franklin Corporation Had Pre-Tax