Posted by **Margary** on Tuesday, June 23, 2009 at 8:47pm.

Suppose the income tax rate schedule is 0 percent on the first $10,000; 10 percent on the next $20,000; 20 percent on the next $20,000; 30 percent on the next $20,000; and 40 percent on any income over $70,000. Family A earns $28,000 a year and Family B earns $65,000 a year. Both receive a ten percent raise. What is the marginal tax rate of each and what is the extra tax paid by each after the raise?

A. Family A: 20 percent marginal tax rate and $560 in extra taxes. Family B: 40 percent marginal tax rate and $2600 in extra taxes.

B. Family A: 20 percent marginal tax rate and $360 in extra taxes; Family B: 40 percent marginal tax rate and $2100 in extra taxes.

C. Family A: 15 percent marginal tax rate and $420 in extra taxes; Family B: 35 percent marginal tax rate and $2275 in extra taxes.

D. Family A: 10 percent marginal tax rate and $280 in extra taxes; Family B: 30 percent marginal tax rate and $1950 in extra taxes.

- !!!***URGENT***!!! -
**Margary**, Tuesday, June 23, 2009 at 9:58pm
Is the answer D?

(I picked D I think the marginal tax rates are correct, but I'm not sure how to calculate the extra tax paid)

- economics -
**economyst**, Wednesday, June 24, 2009 at 10:10am
I think the correct answer is B.

For A, income goes from 28000 to 30800, a change of 2800. Since the new income is between 30000 and 50000, the mtr is 20%. Of the change in income of 2800, 2000 was taxed at the 10% rate and the remaining 800 was taxed at the 20% rate. So, .1*2000+.2*800 = 360.

Repeat for Family B.

## Answer this Question

## Related Questions

- home economics - Suppose you’ll have an annual nominal income of $40,000 for ...
- Finance - Your company sponsors a 401(k) plan into which you deposit 12 percent ...
- Chemistry - Income tax for some states is computed by taking 3% of the excess ...
- wilbur - The electricity costs of a business increased from $18,000 one year to...
- wilbur wright - The electricity costs of a business increased from $18,000 one ...
- Math - Amanda Sabino's taxable income is $20,900.00. How much will she pay in ...
- Economics - The assessed value of Patty's residential property was $200,000 in ...
- Economics - Suppose that the Government runs a pension fund to which all workers...
- MAT115 - if the electricity bill increased from $10,000 to $13,000 in a year, to...
- math - A bond has an average return of 6.8 percent and a standard deviation of 4...

More Related Questions