Question
If the government follows an income tax system in which personal income up to and including K2500 is not taxed, income of K2501 to K5000
If the government follows an income tax system in which personal income up to and including K2500 is not taxed, income of K2501 to K5000 is taxed at 10%, and income over K5000 is taxed at 25%. a) What is the marginal tax rate for a family earning income equal to K6000? (2 Marks) b) What is the average tax rate for a family earning income equal to K6000? (2 Marks) c) How much revenue will the government raise from an individual earning K6000? (2 Marks) d) What type of tax system prevails in this economy? Explain. (2 Marks) e) Distinguish between tax elasticity and tax buoyancy. (2 Marks)
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