Suppose you are a typical person in the U.S. economy. You pay 4 percent of yourincome in a state income tax and 15.3 percent of your labor earnings in federal payrolltaxes (employer and employee shares combined). You also pay federal income taxes asin Table 2. How much tax of each type do you pay if you earn $30,000 a year? Taking alltaxes into account, what are your average and marginal tax rates? What happens toyour tax bill and to your average and marginal tax rates if your income rises to$60,000?
Suppose you are a typical person in the U.S. economy. You pay 4 percent of yourincome in a state income tax and 15.3 percent of your labor earnings in federal payrolltaxes (employer and employee shares combined). You also pay federal income taxes asin Table 2. How much tax of each type do you pay if you earn $30,000 a year? Taking alltaxes into account, what are your average and marginal tax rates? What happens toyour tax bill and to your average and marginal tax rates if your income rises to$60,000?
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter12: The Design Of The Tax System
Section: Chapter Questions
Problem 2PA
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Suppose you are a typical person in the U.S. economy. You pay 4 percent of your
income in a state income tax and 15.3 percent of your labor earnings in federal payroll
taxes (employer and employee shares combined). You also pay federal income taxes as
in Table 2. How much tax of each type do you pay if you earn $30,000 a year? Taking all
taxes into account, what are your average and marginal tax rates? What happens to
your tax bill and to your average and marginal tax rates if your income rises to
$60,000?
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