Marginal corporate tax rates using the corporate tax rate schedule given here, perform the following: a. Find the marginal tax rate for the following levels of corporate earnings before taxes: 514,800; 559,400; 590,000; $195,000; 5397,000; $1.4 million; and $20.3 million. b. Plot the marginal tax rates (measured on the y axis) against the pretax income levels (measured on the x axis). Explain the relationship between these variables a The marginal tax rate for earnings before taxes of $14 800 is 15% (Round to the nearest integer ) The total taxes due for earnings before taxes of $14,800 is s Round to the nearest dollar.) The marginal tax rate for earnings before taxes ofS594 Dis 25% Round to the nearest integer) The total taxes due for earnings before taxes of $59,400 is $L (Round to the nearest dollar ) The marginal tax rate for earnings before taxes of S90000 is 34% Round to the nearest integer The total taxes due for earnings before taxes of $90.000 is $ (Round to the nearest dollar.) The marginal tax rate for earnings before taxes of $195,000 is 30% Round to the nearest integer.) The total taxes due for earnings before taxes of S195.000 is S (Round to the nearest dollar) The marginal tax rate for earnings before taxes of S397 ,000 is 34 % (Round to the nearest integer) The total taxes due for earnings before taxes of $397,000 is S (Round to the nearest dollar) The marginal tax rate freamings before taxes of S14 million is 34% (Round to the nearest integer) The total taxes due for earnings before taxes of $1.4 million is $ (Round to the nearest dollar) The marginal tax rate for earnings before taxes of $20.3 million is 35%. (Round to the nearest integer.) The total taxes due for earnings before taxes of $20.3 million is s(Round to the nearest dollar) b. Plot the marginal tax rates (measured on the y axis) against the pretax income levels (measured on the x axis). The correct shape of the curve is: (Select the best answer below.) O B.
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The marginal tax rate is based on a progressive tax system, where tax rates for an individual will increase as income rises. This method of taxation fairly taxes individuals based upon their earnings, with low income earners being taxed at a lower rate than higher income earners.
As you know there are different slabs of income and tax rates increase as income increases.The current tax rates are as following :
Tax Rate
Income
10%
Up to $8,925
15%
$8,926 to $36,250
25%
$36,251 to $87,850
28%
$87,851 to $183,250
33%
$183,251 to $398,350
35%
$398,351 to $400,000
39.6%
$400,001 or more
Asnwer to Part A:
Total taxes due for earnings :
Answer to Part B :
Correct shape of the curve is the one plotted in Curve B.
| Tax Rate | Income |
| 10% | Up to $8,925 |
| 15% | $8,926 to $36,250 |
| 25% | $36,251 to $87,850 |
| 28% | $87,851 to $183,250 |
| 33% | $183,251 to $398,350 |
| 35% | $398,351 to $400,000 |
| 39.6% | $400,001 or more |
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