Suppose the tax rate is 10 on the first 20000 of taxable


Suppose the tax rate is 10% on the first $20,000 of taxable income, then 25% on the next $30,000, then 50% on all taxable income above $50,000. The government also provides a $4,000 exemption per family member. (a) Ben’s family has three members and earns $50,000 per year. Calculate the family’s marginal and average tax rates. (b) Jerry’s family has five members and earns $85,000 per year. Calculate the family’s marginal and average tax rates. (c) Compare the average tax rates for Ben’s and Jerry’s families. Is this tax system progressive, regressive or proportional?

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Business Economics: Suppose the tax rate is 10 on the first 20000 of taxable
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