An engineer named Don maintains a small incorporated civil engineering consulting practice. Last year, Don’s firm’s taxable income was \($41,000.\) During that year, he spent a great deal of nonbillable time developing computerized tools for analyzing changes in water runoff due to new highway, building, and parking lot construction. Given his expertise and his ability to sign off as a licensed professional engineer (he took the FE exam in college), this year his company has been given the opportunity to take on two projects that will increase taxable income by \($175,000.

a. Determine the effective (average) tax rate on all of last year’s taxable income.

b. Determine the effective (average) tax rate on all of this year’s taxable income.

c. Determine the incremental tax rate.

d. Determine the marginal tax rate this year.