In Taxland, the first $10,000 earned per year is exempt from taxation. Between $10,000.01 and $30,000, the

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In Taxland, the first $10,000 earned per year is exempt from taxation. Between $10,000.01 and $30,000, the tax rate is 25 percent. Between $30,000.01 and $50,000, it's 30 percent. Above $50,000, it's 35 percent. You're earning $75,000 a year.
a. How much in taxes will you have to pay?
b. What is your average tax rate? Your marginal tax rate?
c. Taxland has just changed to a tax credit system in which, in lieu of any exemption, eligible individuals are given a check for $4,000. The two systems are designed to bring in the same amount of revenue. Would you favor or oppose the changes? Why?
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Income Tax Fundamentals 2013

ISBN: 9781285586618

31st Edition

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

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