Problem $02-08($Algo$)[$LO $2-6,2-7]$

Jurisdiction B levies a flat $5$ percent tax on the first $$5$ million of annual corporate income.

Required:

Jersey Incorporated generated $$3\mathrm{.}8$ million income this year. Compute Jersey$$s income tax and determine its average and marginal tax rate on total income.

Leray Incorporated generated $$9\mathrm{.}6$ million income this year. Compute Leray$$s income tax and determine Leray$$s average and marginal tax rate on total income.

What type of rate structure does Jurisdiction B use for its corporate income tax?