ENG 111, Fall 2011
October 10, 2011
HOMEWORK 1 ANSWER KEY
1.
0-50,000
15%
50,001-75,000
25%
75,001-100,00
34%
100,001-335,000
39%
335,000-10,000,000
34%
10,000,001-15,000,000
35%
15,000,001-18,333,333
38%
18,333,334+
35%
Let the income level be denoted by
x.
If
0≤
x
≤50,000, then ATR =
which is flat.
If 50,001≤
x
≤75,000, then ATR =
which is increasing in
x
.
If 75,001≤
x
≤100,000, then ATR = which is increasing in
x
.
Using the same approach, we can see that for the remaining income brackets we have (in
order) :
ATR
increasing in
x.
ATR
flat in
x.
ATR
increasing in
x.
ATR
increasing in
x.
ATR =
.35
flat in
x.
2.
Above calculations show that for any income that is greater than 18,333,333 the
average tax rate is flat, hence the statement is correct.