Suppose the Income Tax Rate Schedule Is 0% on the First

question 126

Multiple Choice

Suppose the income tax rate schedule is 0% on the first $10,000;10% on the next $20,000;20% on the next $20,000;30% on the next $20,000;and 40% on any income over $70,000.Family A earns $28,000 a year and Family B earns $65,000 a year.Both receive a ten percent raise.What is the marginal tax rate of each and what is the extra tax paid by each after the raise?

• A)Family A: 20% marginal tax rate and $560 in extra taxes.Family B: 40% marginal tax rate and $2,600 in extra taxes.
• B)Family A: 15% marginal tax rate and $420 in extra taxes;Family B: 35% marginal tax rate and $2,275 in extra taxes.
• C)Family A: 20% marginal tax rate and $360 in extra taxes;Family B: 40% marginal tax rate and $2,100 in extra taxes.
• D)Family A: 10% marginal tax rate and $280 in extra taxes;Family B: 30% marginal tax rate and $1,950 in extra taxes.

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Definitions:

Neolocal

Pertains to the sociological pattern in which newly married couples establish their residence separately from their families of origin.

Patrilocal

A marital residence pattern in which couples live with or near the husband's parents, often associated with patriarchal societies.

Married

Married refers to the state of being united to someone in a legal or recognized social bond, typically as a spouse in a consensual and contractual relationship.

Single-Person Households

Living arrangements where an individual resides alone in a dwelling.