Average corporate tax rates Ordinary income in 2017 was taxed subject to the rates shown in the accompanying table 1. Using the data in the table, perform the following: a. Calculate a firm's tax liability, after tax earnings, and average tax rate for the following levels of corporate earnings before taxes: $19,800; $70,800; $302,000; $715,000; $1.3 million; $18 million; and $24 million. b. Plot the average tax rate (measured on the y-axis) and the pretax income levels (measured on the x-axis). Explain the relationship between average tax rate and pretax income level.

Average corporate tax rates Ordinary income in 2017 was taxed subject to the rates shown in the accompanying table 1. Using the data in the table, perform the following: a. Calculate a firm's tax liability, after tax earnings, and average tax rate for the following levels of corporate earnings before taxes: $19,800; $70,800; $302,000; $715,000; $1.3 million; $18 million; and $24 million. b. Plot the average tax rate (measured on the y-axis) and the pretax income levels (measured on the x-axis). Explain the relationship between average tax rate and pretax income level.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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what is total tax paid by firm and owner, when corporation has$790 in profits and a 34.2% tax rate (individual tax rate is 12.13%
Subject Finance
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