Calculate the average tax rate for an individual with taxable income of $311, 360. Also, why...

Calculate the average tax rate for an individual with taxable income of $311, 360. Also, why will the average tax rate almost certainly be lower than the marginal tax rate?

Taxable Income Tax Rates

$ 0- 50,000 15%

50,001- 75,000 25%

75,001- 100,000 34%

100,001- 335,000 39%

Solutions

Expert Solution

Calculating the Tax Liability for the Taxable Income of $311,360:-

Tax Bracket	Tax rate		Tax
0-50,000	15%	50,000*15%	7500
50001-75,000	25%	25,000*25%	6250
75,001 - 100,000	34%	25,000*34%	8500
100,001 -335,000	39%	211,360*39%	82,430.40
		Total Tax Liability	104,680.40

Average tax Liability = Total Tax Liability/Taxable Income

= $104,680.40/$311,360

Average tax Liability = 33.62%

b). Marginal tax rate is always higher than average tax rate is because Marginal tax rate is the additional tax paid on the additional income. And since, the tax rate tends to get higher with increase in income Marginal Tax rate is always higher than avearge tax rate. Like in this ques Marginal tax rate is 39% while average tax rate is 33.62%

jeff jeffy answered 2 years ago

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