In: Finance
What do you pay taxes on? Suppose you earned $20,000 and paid 10% tax on the first $10,000 and 20% on all the money you earned above $10,000. What would by your total tax (as a dollar amount)? What would be your average tax (as a %)? What would be your marginal tax (tax on last dollar)?
One pays taxes on income earned
Total tax amount is given as=10%*10000+20%*(20000-10000)=3000.00
Average tax rate=3000.00/20000=15.0000%
Marginal tax rate=20%