Mr. and Mrs. Jerald own a dry cleaning business that generates $165,000 taxable income each

year. For the past few years, the couples federal tax rate on this income has been 32 percent.

Congress recently increased the tax rate for next year to 40 percent.

Required:

a.Based on a static forecast, how much additional revenue will the federal government collect

from Mr. and Mrs. Jerald next year?

b.How much additional revenue will the government collect if Mr. and Mrs. Jerald respond to

the rate increase by working harder and earning $180,000 next year?

c.How much additional revenue will the government collect if Mr. and Mrs. Jerald respond to

the rate increase by working less and earning only $150,000 next year?

2) Jurisdiction X levies a flat 14 percent tax on individual income in excess of $35,000 per year.

Individuals who earn $35,000 or less pay no income tax.

Required:

a.Mr. Hill earned $87,700 income this year. Compute his income tax and determine his

average and marginal tax rate.

b.Ms. Lui earned $41,600 income this year. Compute her income tax and determine her

average and marginal tax rate.

c. Ms. Archer earned $30,400 income this year and paid no income tax. Describe her average

and marginal tax rate.

d. What type of rate structure does Jurisdiction X use for its individual income tax