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8 March, 02:19

Tim earns income of $60,000 per year and pays $21,000 per year in taxes. Tim paid 20 percent in taxes on the first $30,000 he earned. What was the marginal tax rate on the second $30,000 he earned?

a. 20 percent

b. 30 percent

c. 50 percent

d. 70 percent

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Answers (1)
  1. 8 March, 02:23
    0
    c. 50 percent

    Explanation:

    The amount of tax to paid by Tim on the second income he earned during the year shall be calculated as follow:

    Amount of tax on 2nd income=21,000 - (20%*30,000)

    =21,000 - 6,000

    =$15,000

    Marginal tax rate on 2nd income=Amount of tax on 2nd income/2nd income earned during year

    Marginal tax rate=15,000/30,000=50%

    So the answer is c. 50 percent
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