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Country A has a tax rate of 5% on the first $20,000 of taxable income,...

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Accounting

Country A has a tax rate of 5% on the first $20,000 of taxable income, then 20% on the next $30,000, then 50% on all taxable income above $50,000. Country A provides a $10,000 standard deduction.

  1. Person B earns $60,000 per year. He saves $5,000 in an 401(k). Calculate his top marginal tax rate and average tax rate.

  2. Person C earns $100,000 per year. She save $10,000 in a 401(k). Rather than use the standard deduction, she itemizes her deductions because she gives $15,000 to charity each year. Calculate the her top marginal rate and average tax rate.

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