Question

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

Answer 1

Taxpayers -

Giannis

Income = $52,700

This income is within tax bracket of $27,051 to $65,550 with tax rate of 27.5%.

Thus, the marginal tax rate for Giannis is 27.5%.

Calculate the tax amount -

Tax amount = ($27,050 * 0.20) + ($25,650 * 0.275)

Tax amount = $5,410 + $7,053.75

Tax amount = $12,463.75

The tax amount for Giannis is $12,463.75

Calculate the average tax rate -

Average tax rate = Tax amount/Income

Average tax rate = $12,463.75/$52,700

Average tax rate = 0.236 or 23.6%

The average tax rate for Giannis is 23.6%.

Sue

Income = $132,500

This income is within the tax bracket of $65,551 to $136,750 with tax rate of 30.5%.

Thus, the marginal tax rate for Sue is 30.5%

Calculate the tax amount -

Tax amount = ($27,050 * 0.20) + ($38,500 * 0.275) + ($66,950 * 0.305)

Tax amount = $5,410 + $10,587.50 + $20,419.75

Tax amount = $36,417.25

The tax amount of Sue is $36,417.25

Calculate the average tax rate -

Average tax rate = Tax amount/Income

Average tax rate = $36,417.25/$132,500

Average tax rate = 0.275 or 27.5%

The average tax rate for Sue is 27.5%

Damian

Income = $237,000

This income comes within tax bracket of $136,751 to $297,350 with tax rate of 35.5%.

Thus, the marginal tax rate for Damian is 35.5%

Calculate the tax amount -

Tax amount = ($27,050 * 0.20) + ($38,500 * 0.275) + ($71,200 * 0.305) + ($100,250 * 0.355)

Tax amount = $5,410 + $10,587.50 + $21,716 + $35,588.75

Tax amount = $73,302.25

The tax amount of Damian is $73,302.25

Calculate the average tax rate -

Average tax rate = Tax amount/Income

Average tax rate = $73,302.25/$237,000

Average tax rate = 0.309 or 30.9%

The average tax rate for Damian is 30.9%

Brenna

Income = $315250

This income comes within the tax bracket of over $297,350 with tax rate of 39.1%.

Thus, the marginal tax rate for Brenna is 39.1%

Calculate the tax amount -

Tax amount = ($27,050 * 0.20) + ($38,500 * 0.275) + ($71,200 * 0.305) + ($160,600 * 0.355) + ($17,900 * 0.391)

Tax amount = $5,410 + $10,587.50 + $21,716 + $57,013 + $6,998.90

Tax amount = $101,725.4

The tax amount of Brenna is $101,725.40

Calculate the average tax rate -

Average tax rate - Tax amount/Income

Average tax rate = $101,725.40/$315,250

Average tax rate = 0.323 or 32.3%

The average tax rate for Brenna is 32.3%