Asked by Peyton Reyman on Jul 08, 2024
Verified
(Table: Taxes,Spending,and Income) Use Table: Taxes,Spending,and Income.Suppose Governor Meridias initiates a tax of 10% on all income up to $50,000.Income above $50,000 is not taxed.An individual earning $75,000 will have a average tax rate of _____%.
A) 10
B) 0
C) 6.67
D) 5
Average Tax Rate
The ratio of total taxes paid to the total taxable income, reflecting the percentage of income that goes to taxes.
Tax-Free
Earnings or financial transactions that are exempt from taxation by the government.
- Gain insight into the notion and implementation of marginal and average tax rates.
- Determine fiscal liabilities across diverse taxation systems.
Verified Answer
JS
Jamil SalmanJul 12, 2024
Final Answer :
C
Explanation :
Since the individual earns $75,000, their taxable income is only $50,000 ($75,000 - $50,000). Therefore, their tax rate will be 10% of $50,000, which is $5,000. Their average tax rate would be $5,000 / $75,000, which equals 0.0667 or 6.67%. Therefore, the correct answer is C.
Learning Objectives
- Gain insight into the notion and implementation of marginal and average tax rates.
- Determine fiscal liabilities across diverse taxation systems.