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

Congress would like to increase tax revenues by 11.5 percent. Assume that the average taxpayer in the United States earns $62,000 and pays an average tax rate of 10 percent.

Required:

1. If the income effect is in effect for all taxpayers, what average tax rate will result in a 11.5 percent increase in tax revenues?

Note: Round your answer to 2 decimal places.

1. This is an example of what type of forecasting?

Average tax rate % Type of forecasting