Chapter 2 Marginal and Average Tax Analysis - Template

xlsx

School

Iowa State University *

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Course

301

Subject

Economics

Date

Feb 20, 2024

Type

xlsx

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Uploaded by BarristerArt6670

Student Name Phum Uengaksonsamai Example 1 Input Data use Excel calculations where applicable Tax Table $8.5 million Taxable Income Taxable Income Tax Rate Income by Tier Tax Liability - 50,000 15% 50,000 7,500 50,001 75,000 25% 25,000 6,250 75,001 100,000 34% 25,000 8,500 100,001 335,000 39% 235,000 91,650 335,001 10,000,000 34% 8,165,000 2,776,100 10,000,001 15,000,000 35% 15,000,001 18,333,333 38% 18,333,334+ 35% Total 8,500,000 2,890,000 Investment Yields $1M of additional Income $8.5 million taxed at Current Tax Average Marginal Marginal Corporate Tax Rate Liability Tax Rate Tax Tax Rate Tax Rate 2,890,000 34.0% 340,000 34% 1,785,000 21% (1,105,000) Example 2 Input Data using an Excel Calculation Tax Table $19.5 million Taxable Income Taxable Income Tax Rate Income by Tier Tax Liability - 50,000 15% 50,000 7,500 50,001 75,000 25% 25,000 6,250 75,001 100,000 34% 25,000 8,500 100,001 335,000 39% 235,000 91,650 335,001 10,000,000 34% 9,665,000 3,286,100 10,000,001 15,000,000 35% 5,000,000 1,750,000 15,000,001 18,333,333 38% 3,333,333 1,266,667 18,333,334+ 35% 1,166,667 408,333 Total 19,500,000 6,825,000 Investment Yields $1M of additional Income $19.5 million taxed at Current Tax Average Marginal Marginal Corporate Tax Rate Liability Tax Rate Tax Tax Rate Tax Rate 6,825,000 35.0% 340,000 35% 4,095,000 21% Step 1 : Calculate the taxable income by tier and its corresponding tax liability (taxable income x tax rate) Step 2 : Calculate the Average Tax Rate on Total Taxable Income of $8.5 million. Step 3 : Calculate the marginal tax and marginal tax rate on an additional $1.0 million in taxable income. Step 4: Calculate the tax and rate on $8.5 million using current Corporate tax rates. Step 1 : Calculate the taxable income by tier and its corresponding tax liability (taxable income x tax rate) Step 2 : Calculate the Average Tax Rate on Total Taxable Income of $19.5 million. Step 3 : Calculate the marginal tax and marginal tax rate on an additional $1.0 million in taxable income. Step 4: Calculate the tax and rate on $19.5 million using current Corporate tax rates.

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