Question

In: Economics

As of 2015, farms were taxed at 12 percent for income up to $48,000; at 23...

As of 2015, farms were taxed at 12 percent for income up to $48,000; at 23 percent for income ranging from $48,000 to $71,000; at 32 percent for taxable income $71,000 to $89,000; at 35 percent for income from $89,000 to $189,000, and so on.

Suppose that you have revenues of $218,800 and operating expense of $65,000.

            (i)        What is the amount of the taxable income?          

a.

$104,584

b.

$153,800

c.

$218,800

d.

$283,800

                  e.    None of the answers are correct

(ii) How much tax is paid on the first $48,000 of the taxable income?

                        a. $5,760                                                       b. $11,040

                        c. $5,290                                                         d. $5,990

                        e. None of the answers are correct.

            (iii) How much tax is paid on the first $71,000 of the taxable income?

                        a. $16,330                                                      b. $8,520

                        c. $11,050                                                     d. $22,680

                        e. None of the answers are correct

            (iv) How much tax is paid on the total taxable income?

                        a.$22,680                                                       b. $39,490

                        c. $64,800                                                       d. $5,760

                        e. None of the answers are correct

            (v)       What is the average tax rate?

a.

13.91%

b.

25.68%

c.

37.76%

d.

7.68%

                  e.   None of the answers are correct

Enter Response Here:

            (vi) What is the marginal tax rate?

               a.      12%                                                    b.         23%

               c.       32%                                                    d.       35%

               e.      None of the answers are correct

Solutions

Expert Solution

VI) MarginalTax Rate simply means that as there is an increase in the income earned, there will be a corresponding increase in the tax rate that has to be paid. The marginal tax rate aims to conduct a fair tax rate among the citizens on the basis of their individual income.

35% is the marginal tax rate .

Please do like my answer. Thank you.

Rahul Sunny answered 8 months ago
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