Answer:
a. 20%
b. 37.5%
Explanation:
The computation is shown below:
For person average tax rate each week is
= (Total income tax assessment ÷ total pretax weekly income) × 100
= ($40 ÷ $200) × 100
= 20%
And, the marginal tax rate for the last hour is
= (Assessed in taxes for final hour) ÷ (earning per hour) × 100
= ($3) ÷ ($8) × 100
= 37.5%
We compute each of the above by applying the above formula
The average tax rate of a person in each week is 20%, and the marginal tax rate for the last hour when she works each week is 37.5%.
The marginal tax rate is defined as the rate which is levied on taxable income for every additional income earned.
Marginal tax rates are applied into seven tax frames and grouped into four taxable households.
The computation of the average tax rate and the marginal tax rate is:
(a). A person's average tax rate every week is:
According to the given situation,
Total Income Tax Assessment = $40,
Total Pretax Weekly Income = $200
Substituting the values in the formula of the tax rate, we get:
[tex]\text{Average Tax Rate}= \dfrac{\text{Total Income Tax Assessment}}{\text{Total Pretax Weekly Income}}\times100\\\\\text{Average Tax Rate}=\dfrac{\$40}{\$200} \times{100}\\\\\text{Average Tax Rate}=20\%[/tex]
(b). The marginal tax rate for the last hour is:
According to the given situation,
Assessed in taxes for final hour = $3
Earning per hour = $8
Substituting the values in the formula of the marginal tax rate, we get:
[tex]\text{Marginal Tax Rate}= \dfrac{\text{Assessed in Taxes for Final Hour}}{\text{Earning Per Hour}}\times 100\\\\\text{Marginal Tax Rate}= \dfrac{\$3}{\$8}\times100\\\\\text{Marginal Tax Rate}= 37.5\%[/tex]
Therefore, the correct value for(a) is 20%, and for (b) is 37.5%.
Learn more about the marginal tax rate, refer to:
https://brainly.com/question/12395856
