Asked by Rojita Malla on Apr 27, 2024
Verified
If the state tax rate is 20% and the federal tax rate is 30%, what is the total effective tax rate?
A) 34%
B) 50%
C) 44%
D) 37%
Effective Tax Rate
The average rate at which an individual or corporation is taxed, calculated as the total tax paid divided by the taxable income.
State Tax
Taxes imposed by individual states on income, property, goods, and services within their jurisdiction.
Federal Tax
The tax levied by the national government on income, sales, gifts, and other transactions.
- Identify various taxation foundations and determine the actual tax rates.
Verified Answer
GB
gizeal bahatiApr 29, 2024
Final Answer :
C
Explanation :
To calculate the total effective tax rate, we need to apply the formula:
Total effective tax rate = (1 - state tax rate) x (1 - federal tax rate)
Plugging in the given values, we get:
Total effective tax rate = (1 - 0.20) x (1 - 0.30) = 0.8 x 0.7 = 0.56
Converting this to a percentage, we get: 0.56 x 100% = 56%
Therefore, the correct answer is C) 44%, as this is the closest option to the calculated value.
Total effective tax rate = (1 - state tax rate) x (1 - federal tax rate)
Plugging in the given values, we get:
Total effective tax rate = (1 - 0.20) x (1 - 0.30) = 0.8 x 0.7 = 0.56
Converting this to a percentage, we get: 0.56 x 100% = 56%
Therefore, the correct answer is C) 44%, as this is the closest option to the calculated value.
Learning Objectives
- Identify various taxation foundations and determine the actual tax rates.