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Consider an income-tax system that has four tax brackets. The table below shows...

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Accounting

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Consider an income-tax system that has four tax brackets. The table below shows the marginal tax rate that applies to the income in each tax bracket. Earned Income Up to $20,000 $20,001 to $40,000 $40,001 to $80,000 $80,001 and higher Tax Rate in Bracket 0% 15% 30% 35% The table below provides information about two individuals, Michael and Lindsay. Assume that all after-tax income is either saved or spent and that there is a sales tax of 5 percent on all goods and services. a. Calculate the income tax and sales taxes that each individual will pay annually and complete the remainder of the table. (Round your responses to two decimal places.) Michael $38,000 10% $ Lindsay $470,000 30% $ Annual pre-tax taxable income Percentage of after-tax income saved Income tax paid Sales tax paid Percentage of pre-tax income paid in income tax Percentage of pre-tax income paid in sales tax Overall average tax rate S % % % % % %

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