# Using the tax rate schedule given in Table 1.2, per- P1-7 Marginal and average tax rates form the fo

Using the tax rate schedule given in Table 1.2, per- P1-7 Marginal and average tax rates form the following: a. Calculate the tax liability, after-tax earnings, and average tax rates for the fol- lowing levels of partnership earnings before taxes: \$500,000; \$1 million; \$1.5 million; and \$2 million. b. Plot the average tax rates (measured on the y-axis) against the pretax income lev- els (measured on the x-axis). What generalization can be made concerning the relationship between these variables? \$10,000; \$80,000; \$300,000; T ONE Introduction to Managerial Finance 2018 Tax Rate Schedule for Single Taxpayer TABLE 1.2 Tax calculation (Marginal rate X amount over bracket + lower limit) Base tax Taxable income brackets \$ 0 \$ 9,525 \$ \$ 0) 0 (10% X amount over to \$ 9,525) \$ 38,700) \$ 82,500) 38,700 \$ (12% X amount over 9,525 953 + to \$ 4,454 38,700 82,500 (22% X amount over + to \$14,090 (24% X amount over 82,500 157,500 to \$ 32,090 (32% X amount over 157,500 \$157,500) 200,000 to 200,000 \$ 45,690 (35% X amount over \$200,000) 500,000 to Over 500,000 \$150,690 (37% X amount over \$500,000) corporate executives and “outside” or “independent” directors

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