Microeconomics: Private and Public Choice (MindTap Course List)
15th Edition
ISBN: 9781285453569
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 15, Problem 7CQ
To determine
Calculate implicit marginal tax rate.
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Carole works 35 hours a week at a wage rate of $20. Thus, her total weekly income is $700 On this income, she pays total taxes of $49.00 However, she calculates that on the last hour that she works, she pays $4.00 Carole's average tax rate is% (Round your response to two decimal places) Carole's marginal tax rate is% (Round your response to two decimal places) D
Jana has the opportunity to buy the boat of her dreams but needs to determine the best way to fund the purchase. The cost of the boat is $22,000, and she’s considering taking on a second job at which she can earn this amount or selling some investments to generate the cash. However, she realizes that she will also have to pay taxes on any amount she receives. If Jana is in the 35 percent marginal tax bracket and earns $22,000 from a second job, by how much will her end-of-year tax liability increase? What if she elects to sell some investments that she’s held for several years at a gain of $22,000? How would your answer change if she had held the investments for just 6 months?
Laura earns a base salary of $50,000 as an event planner and is subject to the following hypothetical income tax bracket.
Laura is considering taking on an additional wedding that will increase her income by $5,000. In order for Laura to deem
the wedding worth her time, it must earn her $3,000 after taxes. Please round all answers to two decimal places.
Income
Tax rate
$0-$10,000
5%
$10,001-$30,000
10%
20%
$30,001-$50,000
$50,001+
50%
What is the marginal tax rate associated with taking on this wedding?
50
What is Laura's average tax rate if the extra wedding is accepted?
0.1636
Chapter 15 Solutions
Microeconomics: Private and Public Choice (MindTap Course List)
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