Question

Consider a simplified version of the real tax code . assume that the tax rate on all taxable income is 15% and the standard deduction $6350 and personal exemption $4050 still apply. what percentage of your total income would you pay in taxes?

Answer 1

To determine the percentage of your total income paid in taxes with a flat tax rate of 15%, subtract the standard deduction and personal exemption from your income to find your taxable income, then apply the tax rate, and divide by your total income.

Step-by-step explanation:

To calculate what percentage of your total income would be paid in taxes given a tax rate of 15%, a standard deduction of $6,350, and a personal exemption of $4,050, you would follow this process:

1. First, subtract the standard deduction and personal exemption from your total income to find your taxable income.
2. Then, apply the 15% tax rate to this taxable income to calculate the total tax owed.
3. Finally, divide the total tax owed by your total income and multiply by 100 to get the percentage of your total income paid in taxes. For example, if your total income is $50,000, your formula will look like this:

• Taxable Income = $50,000 - ($6,350 + $4,050) = $39,600
• Total Tax Owed = 15% of $39,600 = $5,940
• Percentage of Total Income Paid in Taxes = ($5,940 / $50,000) * 100 = 11.88%

Therefore, with the simplified tax system described, you would pay 11.88% of your total income in taxes.