The statutory marginal tax rate for income levels between $0 and $100,000 is 25%. The statutory marginal tax rate for income levels above $100,000 is 50%. A family with a child purchases 800 hours of childcare per year. The hourly rate for childcare was $10 in 2020. Families can deduct childcare expenditures up to $8,000. One spouse worked during the year while the other spouse did not earn income. The spouse that worked can claim a tax credit of $6,000. What is the after-tax income available to the family when the spouse that worked earned $100,000 in 2020? What is the effective tax rate (taxes paid over total pre-tax income). What is the after-tax income available to the family when the spouse that worked earned $200,000 in 2020? What is the effective tax rate (taxes paid over total pre-tax income). How does the after-tax price of childcare differ compared to the family with income = $100,000. There is an inflation rate of 100% between 2020 and 2021. The family that earned $100,000 in 2020 earns $200,000 in 2021. The hourly wage of childcare also doubles to $20 in 2021. There is no change in income brackets used to calculate tax liabilities, tax credits, or deduction limits. What is the effective tax rate?

Statutory tax rate: It refers to the rate which is legally imposed by the government of a country.…

Answered: The statutory marginal tax rate for…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The statutory marginal tax rate for income levels between $0 and $100,000 is 25%. The statutory marginal tax rate for income levels above $100,000 is 50%. A family with a child purchases 800 hours of childcare per year. The hourly rate for childcare was $10 in 2020. Families can deduct childcare expenditures up to $8,000. One spouse worked during the year while the other spouse did not earn income. The spouse that worked can claim a tax credit of $6,000.

1. What is the after-tax income available to the family when the spouse that worked earned $100,000 in 2020? What is the effective tax rate (taxes paid over total pre-tax income).

1. What is the after-tax income available to the family when the spouse that worked earned $200,000 in 2020? What is the effective tax rate (taxes paid over total pre-tax income). How does the after-tax price of childcare differ compared to the family with income = $100,000.

1. There is an inflation rate of 100% between 2020 and 2021. The family that earned $100,000 in 2020 earns $200,000 in 2021. The hourly wage of childcare also doubles to $20 in 2021. There is no change in income brackets used to calculate tax liabilities, tax credits, or deduction limits. What is the effective tax rate?

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