1) tax rate is (10%/ 15%/ 25%/ 28%/ 33%/ 35%) 2) Yakov calculates that he owes (
ID: 1113052 • Letter: 1
Question
1) tax rate is (10%/ 15%/ 25%/ 28%/ 33%/ 35%) 2) Yakov calculates that he owes (16,837.5/18,481.25/20,148.75/21,071.25/28,000) 3)Average tax rate is (18%/21%/23%/26%/28%) 4) income by $2,000 is (0/420/560/2,000) 3. Taxes paid for a given income level Yakov is getting ready to do his taxes. He is single and lives in Philadelphia. Yakov earned $100,000 in taxable income in 2015. He reviews the following table, which shows the IRS tax rates for a single taxpayer in 2015 On Annual Taxable Income... Up to $9,225 From $9,225 to $37,450 From $37,450 to $90,750 From $90,750 to $189,300 From $189,300 to $411,500 From $411,500 to $413,200 Over $413,200 The Tax Rate Is... (Percent) 10.0 15.0 25.0 28.0 33.0 35.0 39.6 Based on the IRS table, Yakov calculates that his marginal tax rate is when his annual taxable income is $100,000 Yakov calculates that he owes in income taxes for 2015 Yakov then calculates that his average tax rate is , based on the annual income level and the amount of taxes he owes for 2015. After figuring out what he owes in taxes in 2015, Yakov decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $2,000 of taxable income from the federal government The maximum amount that Yakov is willing to pay to learn this strategy and reduce his taxable income by $2,000 is (Hint: Sheltering some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in taxable income and shelters $10,000 pays income tax on only $40,000.)Explanation / Answer
3)
Income = $100000
Marginal tax rate = 28%
Tax owed = 10% x 9225 + 15% x (37450 - 9225) + 25% x (90750 - 37450) + 28% x (100000 - 90750)
Tax owed = $21071.25
Average tax rate = 100 x Tax owed/Income = 21%
Maximum amount Yakov is willing to pay = 2000 x marginal tax rate = 2000 x 28% = $560
6)
ATR = 100 x Tax / Consumption
e.g. Tax when Q = 2500 under plan B : 2000 x 10% + 500 x 25% = 325
ATR = 100 x 325/2500 = 13%
Plan A - Regressive (Decreasing ATR while consumption increases)
Plan B - Progressive
Plan A Plan B Q MTR (%) ATR (%) MTR (%) ATR (%) 600 50 50 10 10 1200 20 45 10 10 2500 20 32 25 13Related Questions
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