Question

In: Economics

Suppose a country has a progressive income tax system that uses the tax table below. Taxable...

Suppose a country has a progressive income tax system that uses the tax table below.

Taxable Income
From To % Tax
0 50,000 10%
50,001 100,000 20%
101,000 200,000 30%
Over 200,000 40%

Assume Joe earns $200,000 of taxable income. How much income tax does he pay?

Group of answer choices

A.80,000

B.45,000

C.60,000

D.25,000

Solutions

Expert Solution

Till income 50,000 he will pay 10%. So, for first 50,000 he will pay tax = 10% of 50,000 = (10/100)*50,000 = 5000

From 50,001 to 100,000 he will pay 20%. So for next 50,000 of his income he will pay tax = 20% of 50,000 = (20/100)*50,000 = 10,000.

Now remaining taxable income is 200,000 - 100,000 = 100,000. From 100,001 to 200,000 he will pay 30%. So for next 100,000 of his income he will pay tax = 30% of 100,000 = (30/100)*100,000 = 30,000.

So Amount of tax he will pay in total = 5,000 + 10,000 + 30,000 = 45,000

Hence, the correct answer is (B) 45,000.


Related Solutions

What is a progressive income tax system and how can an income tax system be structured...
What is a progressive income tax system and how can an income tax system be structured so that it is progressive?
31. Use Table A to complete Table B. TABLE A On Taxable Income The Tax Rate...
31. Use Table A to complete Table B. TABLE A On Taxable Income The Tax Rate Is Up to $27,050 20.0% From $27,051 to $65,550 27.5% From $65,551 to $136,750 30.5% From $136,751 to $297,350 35.5% Over $297,350 39.1% TABLE B Taxpayer Income Tax Amount Average Tax Rate Giannis $52,700 Sue $132,500 Damian $237,000 Breanna $315,250 Marginal Tax Rate
1. Use Table A to Complete Table B. Table A On Taxable Income The Tax Rate...
1. Use Table A to Complete Table B. Table A On Taxable Income The Tax Rate Is Up to $27,050 20.0% From $27,051 to $65,550 27.5% From $65,551 to $136,750 30.5% From $136,751 to $297,350 35.5% Over $297,350 39.1% Table B Taxpayer Income Tax Amount Average Tax Rate Mariginal Tax Rate Giannis $52,700 Sue $132,500 Damian $237,000 Breanna $315,250 2. Bryce loves baseball. During the entire baseball season (every day from mid-March until the end of October), Byrce will watch...
A firm has taxable income of $150,000. What would be it's tax payable? Use the table...
A firm has taxable income of $150,000. What would be it's tax payable? Use the table below and show your calculation. Taxable income Tax Rate Tax Computation $0-50,000 15% 0.15 (income over 50) 50,000-75,000 25% 7500+0.25 (income over 50,000) 75,000-100,000 34% 13750+0.34 (income over 75000) 100,000-335,000 39% 22250+0.39 (income over 100,000)
Which is necessarily true if the government were to replace a progressive income tax system with...
Which is necessarily true if the government were to replace a progressive income tax system with a proportional one? 1) Lower income groups would pay less tax 2) Higher income groups would pay more tax 3) All tax burdens would be exactly the same 4) The distribution of after-tax income would become less equal The Federal payroll (Social Security) tax: 1) Increases the progressivity of the Federal tax system 2) Reduces some of the progressivity of the Federal tax system...
Taxation table Income Tax Standard personal income tax rates Income band Taxable amount Rate K1 to...
Taxation table Income Tax Standard personal income tax rates Income band Taxable amount Rate K1 to K39,600 first K39,600 0% K39,601 to 49,200 next K9,600 25% K49,201 to K74,400 next K25,200 30% Over K74,400 37.5% Income from farming for individuals K1 to K39,600 first K39,600 0% Over K39,600 10% Company Income Tax rates On income from manufacturing and other 35% On income from farming 10% Capital Allowances Implements, plant and machinery and commercial vehicles: Wear and Tear Allowance – Standard...
The tax rates for a particular year are shown below: Taxable Income Tax Rate $0 –...
The tax rates for a particular year are shown below: Taxable Income Tax Rate $0 – 50,000 15 % 50,001 – 75,000 25 % 75,001 – 100,000 34 % 100,001 – 335,000 39 % What is the average tax rate for a firm with taxable income of $122,513?
Based on the amounts of taxable income below, compute the federal income tax payable in 2018...
Based on the amounts of taxable income below, compute the federal income tax payable in 2018 on each amount assuming the taxpayers are married filing a joint return. Also, for each amount of taxable income, compute the average tax rate and the marginal tax rate. a. Taxable income of $30,000 b. Taxable income of $100,000 c. Taxable income of $375,000 d. Taxable income of $700,000
Based on the following table of the tax rates, what is the average tax rate for a firm with taxable income of $120,000?
Based on the following table of the tax rates, what is the average tax rate for a firm with taxable income of $120,000?Taxable Income ($)Tax Rate0 – 50,00015%50,000 – 75,00025%75,000 – 100,00034%100,000 – 335,00039%39%20%34%25%None of the above
#eight The tax rates for a particular year are shown below: Taxable Income Tax Rate $0...
#eight The tax rates for a particular year are shown below: Taxable Income Tax Rate $0 – 50,000 15 % 50,001 – 75,000 25 % 75,001 – 100,000 34 % 100,001 – 335,000 39 % What is the average tax rate for a firm with taxable income of $126,013? 20.00% 39.00% 25.71% 36.61% 28.20%
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT