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

a. Calculate the tax liability, after-tax earnings, and average tax rates for the following levels of partnership earnings before taxes: $12,800; $80,600; $304,000; $495,000; $1.1million; $1.4 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?

Mule Tax Rate - Single Taxpayers-2018 Range of taxable income $0 to $9,525 9,525 to 38,700 38,700 to 82,500 82,500 to 157,500 157,500 to 200,000 200,000 to 500,000 Over 500,000 Base tax $0 953 4,454 14,090 32,090 45,690 150,690 + + + + + + + (10% (12% (22% (24% (32% (35% (37% Tax calculation (Marginal rate x amount over base bracket) X amount over $0) X amount over 9,525) x amount over 38,700) x amount over 82,500) X amount over 157,500) X amount over 200,000) x amount over 500,000) Print Done