Question

Stephanie works 40 hours a week at a wage rate of ​$25. ​ This, her total weekly income is ​$1000. On this​ income, she pays total taxes of ​$80.00. ​ However, she calculates that on the last hour that she​ works, she pays ​$6.25. Stephanie​'s average tax rate is nothing​%.​ (Round your response to two decimal​ places.) Stephanie​'s marginal tax rate is nothing​%. ​(Round your response to two decimal​ places.)

Answer 1

Stephanie's marginal tax rate is 15%.

Explanation:

The Average tax rate is 8%

she pays $3.75 as the tax on $25 which makes tax rate at this point                           =3.75/25

= 15%

The Marginal tax rate is the percentage of income that has to be paid as tax as a result of a change in the income bracket.

For instance, if tax rate until $1-$1000 is 10%

and for $1000 and above is 20%.

So for every $ earned over and above $1000.The marginal tax rate for that sum is 20%.