1) Assume the following tax brackets are legitimate and that a client has $60,000 of economic income of which $35,000 is taxable.

Tax Bracket	Rate
0 - $10,000	10%
$10,001 - $20,000	20%
$20,001 - $50,000	30%
$50,001 and up	40%

What is the clients tax liability?

What is the clients ATR?

What is the clients ETR?

What is the MTR if the client earns an additional $1 of taxable income?

2) Using the facts from example (1), assume the client earns an additional $25,000 in income, $20,000 of which is taxable.

What is the MTR?

3) Using the original facts (example 1), now assume that instead of an increase in income, your client has an unexpected deduction that reduces her taxable income by $10,000.

What is the clients new MTR?