Marginal and average tax rates Partner A, a single taxpayer, is one of two partners in a small business. As such, she receives pass-through income that is taxed at her personal tax rates. After all adjustments and deductions have been made, including the 20% qualified business income deduction, she is preparing to calculate her taxes owed for the year. Using the tax rate schedule given here

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,

perform the following:

a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes:

$ 14 comma 200

;

$ 81 comma 200

;

$ 299 comma 000

;

$ 490 comma 000

;

$ 1.1

million;

$ 1.5

million; and

$ 1.9

million.

b. Plot the average tax rates (measured on the

y-axis)

against the pretax income levels (measured on the

x-axis).

What generalization can be made concerning the relationship between these variables?

a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes:

$ 14 comma 200

;

$ 81 comma 200

;

$ 299 comma 000

;

$ 490 comma 000

;

$ 1 comma 100 comma 000

;

$ 1.5

million; and

$ 1.9

million.

The tax liability for earnings before taxes of

$ 14 comma 200

is

$1,514

.

(Round to the nearest dollar.)

The after-tax earnings on

$ 14 comma 200

are

$12,686

.

(Round to the nearest dollar.)

The average tax rate for the

$ 14 comma 200

in pretax earnings is

nothing

%.

(Round to one decimal place.)