Using the individual tax rate schedule shown in Table 1.2, perform the following:
a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $10,000; $80,000; $300,000; $500,000; $1 million; $1.5 million; and $2 million.
b. Plot the average tax rates (measured on the y-axis) against the pretax income levels (measured on the x-axis). What generalization can be made concerning the relationship between these variables?