Suppose the income tax rate schedule is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000. Family A earns $28,000 a year and Family B earns $65,000 a year. Both receive a ten percent raise. What is the marginal tax rate of each and what is the extra tax paid by each after the raise?
A. Family A: 20 percent marginal tax rate and $360 in extra taxes; Family B-40 percent marginal tax rate and $2100 in extra taxes.
B. Family A: 10 percent marginal tax rate and $280 in extra taxes; Family B-30 percent marginal tax rate and $1950 in extra taxes.
C. Family A: 10 percent marginal tax rate and $420 in extra taxes; Family B-30 percent marginal tax rate and $2275 in extra taxes.
D. Family A: 20 percent marginal tax rate and $560 in extra taxes. Family B-40 percent marginal tax rate and $2600 in extra taxes.
Answer: A
You might also like to view...
As a percentage of GDP, imports are greater than exports for which of the following countries?
A) the Netherlands B) the United States C) Germany D) Italy
The persistent U.S. trade deficit with Japan is
a. surprising because one would expect that bilateral trade between two countries with flexible exchange rates would be in balance. b. surprising because the Japanese are high cost producers of many goods that are purchased in large quantities by U.S. consumers. c. not surprising because there is no reason why bilateral trade between two countries should be in balance. d. proof that the trade practices of the Japanese are unfair toward the United States.