Question

Jurisdiction X levies a flat 14 percent tax on individual income in excess of $35,000 per year. Individuals who earn $35,000 or less pay no income tax. Required: Mr. Hill earned $98,750 income this year. Compute his income tax and determine his average and marginal tax rate. Ms. Lui earned $47,900 income this year. Compute her income tax and determine her average and marginal tax rate. Ms. Archer earned $34,100 income this year and paid no income tax. Describe her average and marginal tax rate. What type of rate structure does Jurisdiction X use for its individual income tax?

Answer 1

Answer:

A. Taxable income =$63,750

Income tax = $8,925

Average rate=9%

MARGINAL RATE 14%

B. Taxable income= $12,900

Income tax =$1,806

Average rate =3.8%

MARGINAL RATE 14%

C. Zero

D. PROGRESSIVES RATE STRUCTURE

Explanation:

a. Computation for income tax, average , and marginal tax.

Computation for Mr. Hill's taxable income

Taxable income =($98,750 -$35,000)

Taxable income =$63,750

Computation for Mr. Hill's income tax

Income tax=($63,750 ×14%)

Income tax = $8,925

Computation for Mr. Hill's average rate Average rate= ($8,925 ÷$98,750)

Average rate=9%

Based on the information given we were told they levies a flat 14% tax which means that the

MARGINAL RATE will be 14%.

B. Computation for Ms. Lui income, average , and marginal tax.

Taxable income=

($47,900 -$35,000)

Taxable income= $12,900

Income tax = ($12,900 ×14%)

Income tax =$1,806

Average rate = ($1,806 ÷$47,900)

Average rate =3.8%

Based on the information given we were told they levies a flat 14% tax which means that the

MARGINAL RATE will be 14%

C. Based on the information given about Ms. Archer's we were told that she earned the amount of $34,100 as income this year in which she as well paid no income tax which means that her average and marginal rates will be Zero (0).

d. Based on the information given a bit Jurisdiction X we can tend to say that Jurisdiction X make use of PROGRESSIVES RATE STRUCTURE reason been that the Jurisdiction X average rate will continue to increase as the individual income increases.