David has an yearly income of EUR 30,000.He lives in a country where income tax is defined on the basis of brackets: the statutory tax rate of the first bracket (up to 15,000 euro) is 10%, that of the second (up to 30,000 euro) is 20%, that of the third (over 30,000 euro) is 25 %.

a) Calculate David's tax liability and average tax rate.

b) Calculate David's tax liability and average tax rate if the government decides to introduce a tax credit or allowance of EUR 1,500.

c) David is offered an additional contract of EUR 5,000. Re-calculate David's tax liability in the presence of the tax credit of EUR 1,500.

d) Define and calculate David's marginal tax rate when moving from the situation described in point (b) to the situation in point (c).

Answer rating: 100% (QA)

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