5. Understanding marginal and average tax rates Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at $1 each. The government has devise the following tax plans: Plan A Plan B • Consumption up to 1,000 coconuts is taxed at 50%. • Consumption up to 2,000 coconuts is taxed at 15%. • Consumption higher than 1,000 coconuts is taxed at 20%. • Consumption higher than 2,000 coconuts is taxed at 60%. Use the Plan A and Plan B tax schemes to complete the following table by deriving the marginal and average tax rates under each tax plan at the consumption levels of 300 coconuts, 1,200 coconuts, and 3,000 coconuts, respectively.
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- 27. Understanding Marginal and Average Tax Rates Consider the economy of Cocoland, where citizens consume only coconuts. Assume that coconuts are priced at €1 each, and each person can buy, at most, 5000 coconuts. The government has devised the following tax plans: Plan A: Consumption up to 1,000 coconuts is taxed at 10%. Consumption higher than 1,000 coconuts is taxed at 40%. Plan B: Consumption up to 2,000 coconuts is taxed at 20%. Consumption higher than 2,000 coconuts is taxed at 10% Derive the marginal and average tax rates under each tax plan at the consumption levels of 500 coconuts, 1,500 coconuts, and 2,500 coconuts, respectively. Fill in the following table with your results. Consumption Plan A Plan B Level Marginal Tax Rate Average Tax Rate Marginal Tax Rate Average Tax Rate 500 coconuts 1,500 coconuts 2,500 coconuts Under Plan A, the average tax rate Vas more coconuts are consumed. Therefore, Plan Aia e tax System. Grade It Now Save & Continue savingScenario: You have just been hired by the country of "Shorelinia" to create a tax system. Your tax system must collect at least $1,000 billion in revenue. You have three taxes to choose from; income tax, sales tax, and payroll tax. a) Step 1.A.1. - Personal Income Tax rates You must decide personal income tax rates for 3 income groups: lower, middle, and upper income. (For each group you will choose the marginal tax rate. Your choices are 0%, 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, or 50%.) In the table below, you will find how much revenue you will collect from each income group. Income tax revenue (in billions of $) at various tax rates 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Lower $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Middle $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 $250 Upper $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 The income tax rates will be: Lower (income under $40,000) =…Consider a tax system where the first $40,000 of income is tax free, the next $40,000 is taxed at 10%, and all income above $80,000 is taxed at 20%. 1. Graph the total tax as a function of income. Be sure to label carefully. Тах Income 2. Graph the ATR(average) and MTR(marginal) rate. Label carefully. MTR, ATR 0.40 0.20 0.00 Income 3. Calculate the tax for individuals that earn: $20,000 Tax = ATR = %, MTR = $40,000 Tax = ATR = MTR = $60,000 Tax = ATR = MTR = $80,000 Tax = ATR = MTR = $100,000 Tax = ATR = MTR =
- The government of Lesotho charges 10% on income up to M75 000 plus 16% any amount over M70 000 up M300 000 and 26% of any amount over M300 000. Express the above as a tax function. Find the income tax for an income of M125 000. Compute the income tax of an income of M350 000.Question 1: Value Added Tax Ali, a consumer, buys electronics worth $20,000, while Consumer Jumabuys for $45,000 and Consumer Saif spends to the value of $100,000. VAT is charged at 5% on the price marked on the products. What is the VAT payable to the government? Explain the type of taxation system applicable in this situation. Is this system of taxation fair? Explain why this system is being criticised?D6) If the corporate tax rate in a foreign country is 20%and the tax rate in the home country is 30%, when calculating NPV a.you must account for paying the additional 10% in corporate taxes. b.you do NOT adjust NPV for taxes c.you should account for paying an additional 30% in corporate taxes. d.you should increase the NPV of the project by 10%.
- Problem 4 Suppose tax = 0%. Consider an EITC program in which the maximum credit is $4000. An individual who has earned income between $10,000 and $15,000 receives the maximum credit (i.e.- someone who has earned income of $10,000 will have total income of $14,000 because of the tax credit). An individual who has earned income of $19,000 has total income of $19,250. What is the implicit tax rate that the individual who has earned income of $19,000 faces? (Express your answer as a percentage. Don't enter a percentage sign. Round your final answer to four decimal places if necessary. For example, if the tax rate is 99.9%, enter your answer as 99.9.)Suppose you earn $60,000 per year and pay taxes based on marginal tax rates. The first tax bracket, which taxes at 5 percent, ranges from $0 to $30,000. The second tax bracket, which taxes at 25 percent, ranges from $30,001 to $120,000. How much will you pay in total taxes? Instructions: Enter your answer as a whole number. %24Let's assume you live in a country with a progressive tax system that has the following tax brackets: • 0% on income up to $10,000 • 10% on income between $10,001 and $50,000 • 20% on income between $50,001 and $100,000 • 30% on income above $100,000 Suppose your annual income is $75,000. How much tax do you pay? a. $10,000 b. C. d. $7500 $8500 $9000
- Ma1. The state imposes a progressive tax of 1.5% in order to achieve justice as much as possible among the segments of society. It starts from an income of 10,000 Omani riyals onwards. So that the percentage multiplies by doubling the income. That is, for each income of 10,000 Omani riyals, 1.5%, and there are five people, the first person has an income of 40,000 Omani riyals. And the second person's income is 6000 Omani riyals. And the third person's income is 90,000 Omani riyals. And the fourth person has an income of 51,000 Omani riyals. And the fifth person has an income of 200,000 Omani riyals.) Question: According to the data mentioned above, find the tax rate imposed on the five persons. And the amount owed by each one of them?QUESTION 17 Answer questions 17 and 18 based on the following information: As you know, Flabovia has adopted a Value Added Tax (VAT); the tax rate across the board is 15%. A farmer grows vegetables and sells them to the wholesaler for $1/lb. The wholesaler sells them to the local market for $3/1b. The market then sells them to its customers for $10/lb. Question 17. The total tax received by the government is $ while the total tax paid by the customer is $ (Write-in your answer).1. Suppose the gross sales of Lukah’s Coffee Shop for the month of April is Php 50,000. How much is its gross profit? A. 50,000 B. 32,000 C. 20,500 D. 38,500 2. How about its income before tax? A. 50,000 B. 32,000 C. 20,500 D. 38,500 3. Suppose the government imposes a 5% income tax on all businesses earning an income worth Php 50,000 and below. Solve for the income after tax of Lukah’s Coffee Shop. A. 30,400 B. 32,000 C. 20,000 D. 19,475 4. Now, suppose the rent expense increased from Php 3,500 to Php 4,000. What is now the income before tax of Lukah’s Coffee Shop? A. 30,400 B. 32,000 C. 20,000 D. 19,475 5. Given the change in the gross profit due to an increase in the cost of rental space, how much, then, is the income after tax of Lukah’s Coffee Shop? A. 30,400 B. 32,000 C. 20,000 D. 19,000