Find the average tax rate and the marginal tax rate

Reference no: EM13759524

Suppose that the income tax law exempt income of less than 8,000 from being taxed, taxes income between $8,000 and $20,000 at 25% rate, and taxes income greater than 20,00 at a 30% rate.

Find the average tax rate and the marginal tax rate for someone earning 16,000 and for someone earning 30,000.
The tax law is changed so that income of less than 6,000 is untaxed, income from 6,000 to 20,00 is taxed 20%, and income of more than 20,000 continues to be taxed at 30%. Repeat Part (a)
How will that tax law change in Part (b) affect the labor supply of the person initially making $16,000? How will it affect the labor supply of the person making $30,000.

Reference no: EM13759524

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