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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Need help to learn how to calculate the tax liability, after-tax earnings, and average tax rates for the following levels of corporate earnings before taxes:
$7,700; $81,100; $304,000; $499,000;$1.9 million; $9.8 million; and $19.8 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?
Attached is the chart

Transcribed Image Text:Corporate Tax Rate Schedule
Tax calculation
Range of taxable income
$0 to
(Marginal rate x amount over base bracket)
$0)
50,000)
Base tax
+
$50,000
$0
x amount over
(15%
(25%
(34%
(39%
(34%
(35%
(38%
(35%
+
50,000 to
x amount over
75,000
100,000
335,000
7,500
+
x amount over
x amount over
75,000)
100,000)
335,000)
10,000,000)
15,000,000)
18,333,333)
75,000 to
13,750
22,250
100,000 to
x amount over
335,000 to
10,000,000 to
10,000,000
113,900
+
15,000,000
3,400,000
+
x amount over
15,000,000 to
Over 18,333,333
x amount over
x amount over
18,333,333
5,150,000
6,416,667
+
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