Problem 1-58 (LO 1-3, LO 1-5) (Algo)

Congress would like to increase tax revenues by 12.5 percent. Assume that the average taxpayer in the United States earns $63,000 and pays an average tax rate of 20 percent.

a. If the income effect is in effect for all taxpayers, what average tax rate will result in a 12.5 percent increase in tax revenues? (Round your answer to 2 decimal places.)

Average Tax Rate ______________ %