Question

Computing and interpreting average tax rates In a hypothetical economy, Yakov earns $38,000, Ana earns $76,000, and Charles earns $114,000 in annual income. The following table shows the annual taxable income and tax liability for these three single individuals. For example, Yakov, who earns $38,000, owes $5,320 in taxes. Use the tax liability figures provided to complete the following table by computing the average tax rate for Yakov, Ana, and Charles an income of $38,000,$76,000, and $114,000, respectively. The income tax system for this country is :

Answer 1

To compute the average tax rate, divide the tax liability by the taxable income and multiply by 100. The average tax rates for Yakov, Ana, and Charles are 13.9%, 18.8%, and 23.1%, respectively.

Step-by-step explanation:

To compute the average tax rate, you divide the tax liability by the taxable income and then multiply by 100 to get a percentage. Let's calculate the average tax rates for Yakov, Ana, and Charles.

• Yakov: taxable income = $38,000, tax liability = $5,320. Average tax rate = (5,320/38,000) * 100 = 13.9%
• Ana: taxable income = $76,000, tax liability = $14,320. Average tax rate = (14,320/76,000) * 100 = 18.8%
• Charles: taxable income = $114,000, tax liability = $26,320. Average tax rate = (26,320/114,000) * 100 = 23.1%