Refer to Country A's rate structure described in the preceding problem. Ms. SP's annual taxable income for years 1 through 5 is $150,000. Ms. OC's taxable income for years 1 through 4 is $20,000. In year 5, Ms. OC wins a lottery, and her taxable income for this one year jumps to $670,000.
a. How much total income does each individual earn over the 5-year period?
b. Compute each individual's average tax rate for the 5-year period.
Data from preceding problem
Percentage Rate ___________________ Bracket
10% ............................... Income from -0- to $20,000
15 ................................. Income from $20,001 to $75,000
25 ................................. Income from $75,001 to $160,000
30 ................................. Income in excess of $160,000