3 You recelved no credit for this question in the previous a

3 You recelved no credit for this question in the previous attempt. Chuck.a single taxpayer, eams $84,500 in taxable income and $23,000 in interest from an investment in City of Heflin bonds.(Use the U.S tax rate schedule) (Do not round intermediate calculations. Round your answers to 2 decimal places.) a. If Chuck earns an additional $56,000 of taxable income, what is his marginal tax rate on this income? 75 oints eBook Print References b. What is his marginal rate if, instead, he had $56,000 of additional deductions?

Solution

Tax on $84500 = 5226.25+(84500-37950)*0.25= 16863.75 a Taxable income = 84500+56000= 140500 Tax on $140500 = 18713.75+(140500-91900)*0.28= 32321.75 Marginal tax rate =(32321.75-16863.75)/(140500-84500)= 27.60% b Taxable income = 84500-56000= 28500 Tax on $28500 = 932.5+(28500-9325)*0.15= 3808.75 Marginal tax rate =(16863.75-3808.75)/(84500-28500)= 23.31%