Question
Asked Dec 13, 2019
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Suppose that a nation decides to introduce a new income tax system with the tax brackets shown in the table.
Income range
Tax rate
$0-$20,000
0%
$20,001–$39,000
31%
42%
$39,001-$70,000
$70,001+
50%
Use the table to calculate the average tax rate and marginal tax rate for each of the families. Where applicable, round your
answer to the nearest whole number.
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Suppose that a nation decides to introduce a new income tax system with the tax brackets shown in the table. Income range Tax rate $0-$20,000 0% $20,001–$39,000 31% 42% $39,001-$70,000 $70,001+ 50% Use the table to calculate the average tax rate and marginal tax rate for each of the families. Where applicable, round your answer to the nearest whole number.

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Lee family
Income = $123,000
Average tax rate:
60
Marginal tax rate:
50
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Lee family Income = $123,000 Average tax rate: 60 Marginal tax rate: 50

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Expert Answer

Step 1

Under progressive tax system higher income people pay higher taxes. Average tax rate is used to calculate how much tax is paid overall.

Average tax paid by Lee family = [(39,000 - 20,000)*0.31 + (70,000 - 39,000)*0.42

                                                     + (123,000 - 70,000)*0.50 ]/ 123,000

                                          ...

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