Consider a tax system where the first $40,000 of income is tax free, the next$40,000 is taxed at 10%, and all income above $80,000 is taxed at 20%.1. Graph the total tax as a function of income. Be sure to label carefully.ТахIncome2. Graph the ATR(average) and MTR(marginal) rate. Label carefully.MTR, ATR0.400.200.00Income3. Calculate the tax for individuals that earn:$20,000Tax =ATR =%, MTR =$40,000Tax =ATR =MTR =$60,000Tax =ATR =MTR =$80,000Tax =ATR =MTR =$100,000Tax =ATR =MTR =

Here discuss about the details of average tax rate, marginal tax rate and taxes which are involved…

Consider a tax system where the first $40,000 of income is tax free, the next $40,000 is taxed at 10%, and all income above $80,000 is taxed at 20%. 1. Graph the total tax as a function of income. Be sure to label carefully. Тах

Consider a tax system where the first $40,000 of income is tax free, the next $40,000 is taxed at 10%, and all income above $80,000 is taxed at 20%. 1. Graph the total tax as a function of income. Be sure to label carefully. Тах

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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Question

Consider a tax system where the first $40,000 of income is tax free, the next
$40,000 is taxed at 10%, and all income above $80,000 is taxed at 20%.
1. Graph the total tax as a function of income. Be sure to label carefully.
Тах
Income
2. Graph the ATR(average) and MTR(marginal) rate. Label carefully.
MTR, ATR
0.40
0.20
0.00
Income
3. Calculate the tax for individuals that earn:
$20,000
Tax =
ATR =
%, MTR =
$40,000
Tax =
ATR =
MTR =
$60,000
Tax =
ATR =
MTR =
$80,000
Tax =
ATR =
MTR =
$100,000
Tax =
ATR =
MTR =

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