The 2019 tax brackets in France are given in the table. Gabriel has a taxable income of €36,700 (for reference, this is above the French national average). Let's calculate his tax bill. The first €9,964 of his earnings are untaxed. €27,519 - €9,964 = €17,555 is taxed at the 14% rate. €36,700 - €27,519 = €9,181 is taxed at the 30% rate. For each of these 'chunks' of his income, let's calculate the tax owed by multiplying the tax rate by the number of euros taxed at that rate. The 0% chunk: .00 * €9,964 = €0 The 14% chunk: .14 * €17,555 = ? (you figure this out) The 30% chunk: .30 * €9,181 = ? (you figure this out, too) Now add the tax on all three 'chunks' together to find his total tax: €0 + ? + ? and enter it in the space below.
The 2019 tax brackets in France are given in the table. Gabriel has a taxable income of €36,700 (for reference, this is above the French national average). Let's calculate his tax bill. The first €9,964 of his earnings are untaxed. €27,519 - €9,964 = €17,555 is taxed at the 14% rate. €36,700 - €27,519 = €9,181 is taxed at the 30% rate. For each of these 'chunks' of his income, let's calculate the tax owed by multiplying the tax rate by the number of euros taxed at that rate. The 0% chunk: .00 * €9,964 = €0 The 14% chunk: .14 * €17,555 = ? (you figure this out) The 30% chunk: .30 * €9,181 = ? (you figure this out, too) Now add the tax on all three 'chunks' together to find his total tax: €0 + ? + ? and enter it in the space below.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
The 2019 tax brackets in France are given in the table.
Gabriel has a taxable income of €36,700 (for reference, this is above the French national average). Let's calculate his tax bill.
The first €9,964 of his earnings are untaxed.
€27,519 - €9,964 = €17,555 is taxed at the 14% rate.
€36,700 - €27,519 = €9,181 is taxed at the 30% rate.
For each of these 'chunks' of his income, let's calculate the tax owed by multiplying the tax rate by the number of euros taxed at that rate.
The 0% chunk: .00 * €9,964 = €0
The 14% chunk: .14 * €17,555 = ? (you figure this out)
The 30% chunk: .30 * €9,181 = ? (you figure this out, too)
Now add the tax on all three 'chunks' together to find his total tax: €0 + ? + ? and enter it in the space below.
Transcribed Image Text:### Marginal Tax Rate Table
This table provides a breakdown of marginal tax rates for different portions of income. Understanding how marginal tax rates work is essential for financial planning and tax preparation.
#### Income Brackets and Corresponding Marginal Tax Rates:
- **Up to €9,964:** The marginal tax rate is **0%**. Income within this range is not taxed.
- **€9,964 to €27,519:** Income within this bracket is taxed at a **14%** rate.
- **€27,519 to €73,779:** The tax rate for this range increases to **30%**.
- **€73,779 to €156,244:** A higher tax rate of **41%** is applied to income in this bracket.
- **€156,244 and up:** The highest marginal tax rate of **45%** applies to any income exceeding this amount.
### Explanation
Marginal tax rates apply only to the income that falls within each specified bracket. For example, if your income is €80,000, different portions of your income will be taxed at the respective rates for each bracket up to €73,779, and then the remaining part (€6,221 in this case) will be taxed at 41%. Only income above €156,244 would be subject to the top rate of 45%.
This approach ensures that individuals pay a fair share of taxes relative to their earnings, with higher earners contributing a larger percentage of their income. Understanding this structure helps in making informed financial decisions, such as investment planning and expense management.
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