2. Taxes paid for a given income level Suppose that Eric is preparing to file his taxes. He is single and currently lives in Chicago. Eric earned $110,000 in taxable income in 2022. He reviews the following table, which shows the IRS tax rates for a single taxpayer in 2022. On Annual Taxable Income... The Tax Rate Is... (Percent) Up to $10,275 10.0 From $10,275 to $41,775 12.0 From $41,775 to $89,075 22.0 From $89,075 to $170,050 24.0 From $170,050 to $215,950 32.0 From $215,950 to $539,900 Over $539,900 35.0 37.0 Based on the IRS table, Eric calculates that his marginal tax rate is when his annual taxable income is $110,000. Eric calculates that he owes in income taxes for 2022. Eric then calculates that his average tax rate is based on the annual income level and the amount of taxes he owes for 2022. After figuring out what he owes in taxes in 2022, Eric decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $2,000 of taxable income from the federal government. The maximum amount that Eric is willing to pay to learn this strategy and reduce his taxable income by $2,000 is, (Hint: Sheltering some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in taxable income and shelters $10,000 pays income tax on only $40,000.)
2. Taxes paid for a given income level Suppose that Eric is preparing to file his taxes. He is single and currently lives in Chicago. Eric earned $110,000 in taxable income in 2022. He reviews the following table, which shows the IRS tax rates for a single taxpayer in 2022. On Annual Taxable Income... The Tax Rate Is... (Percent) Up to $10,275 10.0 From $10,275 to $41,775 12.0 From $41,775 to $89,075 22.0 From $89,075 to $170,050 24.0 From $170,050 to $215,950 32.0 From $215,950 to $539,900 Over $539,900 35.0 37.0 Based on the IRS table, Eric calculates that his marginal tax rate is when his annual taxable income is $110,000. Eric calculates that he owes in income taxes for 2022. Eric then calculates that his average tax rate is based on the annual income level and the amount of taxes he owes for 2022. After figuring out what he owes in taxes in 2022, Eric decides to ask an accountant for tax advice. The accountant claims that he has found a legal way to shelter $2,000 of taxable income from the federal government. The maximum amount that Eric is willing to pay to learn this strategy and reduce his taxable income by $2,000 is, (Hint: Sheltering some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in taxable income and shelters $10,000 pays income tax on only $40,000.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Transcribed Image Text:2. Taxes paid for a given income level
Suppose that Eric is preparing to file his taxes. He is single and currently lives in Chicago. Eric earned $110,000 in taxable income in 2022. He reviews
the following table, which shows the IRS tax rates for a single taxpayer in 2022.
On Annual Taxable Income...
The Tax Rate Is...
(Percent)
Up to $10,275
10.0
From $10,275 to $41,775
12.0
From $41,775 to $89,075
22.0
From $89,075 to $170,050
24.0
From $170,050 to $215,950
32.0
From $215,950 to $539,900
Over $539,900
35.0
37.0
Based on the IRS table, Eric calculates that his marginal tax rate is
when his annual taxable income is $110,000.
Eric calculates that he owes
in income taxes for 2022.
Eric then calculates that his average tax rate is
based on the annual income level and the amount of taxes he owes for 2022.
After figuring out what he owes in taxes in 2022, Eric decides to ask an accountant for tax advice. The accountant claims that he has found a legal
way to shelter $2,000 of taxable income from the federal government.
The maximum amount that Eric is willing to pay to learn this strategy and reduce his taxable income by $2,000 is,
(Hint: Sheltering
some income means finding a legal way to avoid being charged income tax on that income. For example, someone who has $50,000 in taxable income
and shelters $10,000 pays income tax on only $40,000.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education