Question

Immy Tappan is single and had $197,000 in taxable income. Using the rates from Table 2.3 in the chapter, calculate his income taxes.

a. What is the average tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b.What is the marginal tax rate? (Do not round intermediate calculations and enter your answer as a percent rounded to the nearest whole number, e.g., 32.)
a. Average tax rate %
b. Marginal tax rate %

Answer 1

To calculate the average and marginal tax rates for Jimmy Tappan, we need to refer to Table 2.3 in the chapter which provides the tax rates. The average tax rate is the percentage of taxable income that goes towards taxes, while the marginal tax rate is the tax rate paid on an additional dollar of income.

Step-by-step explanation:

The average tax rate is the percentage of an individual's taxable income that goes toward taxes. To calculate Jimmy's average tax rate, we need to look at the tax rates from Table 2.3 in the chapter. However, since the table is not provided, I am unable to give you the exact average tax rate. Typically, the average tax rate is found by dividing the total tax paid by the taxable income and multiplying it by 100 to get it as a percentage.

The marginal tax rate is the tax rate paid on an additional dollar of income. This is determined by finding the tax bracket that Jimmy's taxable income falls into. The marginal tax rates can also be found in Table 2.3. Again, without the table, I am unable to provide you with the exact marginal tax rate for Jimmy's income. It is essential to note that the marginal tax rate is usually higher than the average tax rate since it applies to the last dollar earned.