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Social Science Clinic => Economics => Topic started by: mimie on Nov 23, 2022

Title: Average Tax Rate vs. Marginal Tax RateThe table shows income tax brackets for the country of ...
Post by: mimie on Nov 23, 2022

Average Tax Rate vs. Marginal Tax Rate

The table shows income tax brackets for the country of Ficta.

Income Tax Brackets	Tax Rate
$0-$10,000	9%
$10,001-$40,000	12%
$40,001-$85,000	18%
$85,001-$160,000	32%
$160,001-$205,000	33%
$205,001-$510,000	38%
Over $510,000	43%

What is the marginal tax rate for a person who earns $185,000 a year and has no deductions or exemptions? What is the average tax rate?
Please round your final answer to the nearest integer.
◦ 33%, 28%
◦ 1%, 21%
◦ 28%, 33%
◦ 21%, 1%

Title: Average Tax Rate vs. Marginal Tax RateThe table shows income tax brackets for the country of ...
Post by: gwisel on Nov 23, 2022

33%, 28%

The marginal tax rate for a person who earns $185,000 a year is the tax rate for the bracket at that level of income, or 33%.

The average tax rate can be found by determining the total tax payment divided by income.
Average tax rate = Total tax payment/Income
For a person who earns $185,000 a year, the table shows the tax paid for each level of income.

Income Tax Brackets	Tax Rate	Tax total
$0-$10,000	9%	10,000*(9/100) =900.00
$10,001-$40,000	12%	(40000-10000)*(12/100) = 3,600.00
$40,001-$85,000	18%	(85000-40000)*(18/100)= 8,100.00
$85,001-$160,000	32%	(160000-85000)*(32/100) = 24,000.00​
$160,001-$205,000	33%	(200000-160000)*(33/100) = 8,250.00​
Total	​	900.00+3,600.00+8,100.00+24,000.00+8,250.00 = $51,150.00

Therefore, the average tax = Total tax payment/Income = 100*51,150.00/185,000 = 28%.