Leonardo, Who Is Married but Files Separately, Earns $80,000 of Taxable

question 64

Multiple Choice

Leonardo, who is married but files separately, earns $80,000 of taxable income. He also has $15,000 in city of Tulsa bonds. His wife, Theresa, earns $50,000 of taxable income. If Leonardo instead had $30,000 of additional tax deductions for year 2016, his marginal tax rate (rounded) on the deductions would be:

• A) 28.00%
• B) 25.00%
• C) 25.41%
• D) 16.56%
• E) None of these

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Definitions:

Marginal Product

The additional output produced by employing one more unit of a particular input, holding other inputs constant.

Wage

A fixed regular payment, typically paid on a daily or weekly basis, made by an employer to an employee, especially to manual or unskilled workers.

Rental Rate

The cost associated with leasing a particular commodity, property, or piece of equipment per unit time.

Marginal Product

The extra production resulting from the increase of a particular input by one unit, assuming all other factors remain constant.