Top of Form 2. Using Table 3.7, calculate the marginal and average tax rates for a single taxpayer with the following incomes: (Do notround intermediate calculations. Round "Average tax rate" to 2 decimal places.) | | Income | Marginal Tax Rate | Average Tax Rate | a. | $21,000 | % | % | b. | $51,000 | % | % | c. | $304,000 | % | % | d. | $3,200,000 | % | % | |

Explanation:

a. | Taxes = (0.10 × $8,500) + 0.15 × ($21,000 − $8,500) = $2,725 | Marginal tax rate = 15% | Average tax rate = $2,725/$21,000 = 0.12976 = 12.98% | | b. | Taxes = (0.10 × $8,500) + 0.15 × ($34,500 − $8,500) + 0.25 × ($51,000 − $34,500) = $8,875 | Marginal tax rate = 25% | Average tax rate = $8,875/$51,000 = 0.17402 = 17.40% | | c. | Taxes = (0.10 × $8,500) + 0.15 × ($34,500 − $8,500) + 0.25 × ($83,600 − $34,500) + 0.28 × ($174,400 − $83,600) + 0.33 × ($304,000 − $174,400) = $85,217 | Marginal tax rate = 33% | Average tax rate = $85,217/$304,000 = 0.280319 = 28.03% | | d. | Taxes = (0.10 × $8,500) + 0.15 × ($34,500 − $8,500) + 0.25 × ($83,600 − $34,500) + 0.28 × ($174,400 − $83,600) + 0.33 × ($379,150 − $174,400) + 0.35 × ($3,200,000 − $379,150) = $1,097,314.0 | Marginal tax rate = 35% | Average