Asked by pizza and spagghetti on May 09, 2024
Verified
Suppose the government imposes a tax of 10 percent on the first $40,000 of income and 20 percent on all income above $40,000. What are the tax liability and the marginal tax rate for a person whose income is $50,000?
A) 12 percent and 20 percent, respectively
B) 12 percent and $50,000, respectively
C) $6,000 and 12 percent, respectively
D) $6,000 and 20 percent, respectively
Marginal Tax Rate
The rate at which the last dollar of income is taxed, representing the percentage of additional income that is paid in tax.
Tax Liability
The total amount of tax that an individual or a corporation owes to the government.
Income
The total amount of money earned or received by an individual or group, typically within a specified period, from work, investments, or other sources.
- Master the ideas involving marginal and average tax rates.
- Employ tax rate insights to calculate fiscal obligations.
Verified Answer
AM
Azrienne MillerMay 13, 2024
Final Answer :
D
Explanation :
The tax liability is calculated as 10% of the first $40,000 ($4,000) plus 20% of the remaining $10,000 ($2,000), totaling $6,000. The marginal tax rate, which is the rate applied to the last dollar earned, is 20% for income above $40,000.
Learning Objectives
- Master the ideas involving marginal and average tax rates.
- Employ tax rate insights to calculate fiscal obligations.