Solved

Mr Smith Earns $100,000 Per Year

Question 63

Multiple Choice

Mr. Smith earns $100,000 per year. Each year he spends $50,000 and saves $50,000. He pays a 5 percent sales tax on all of his spending. Assuming the sales tax is the only tax he pays, his average tax rate out of his income is


A) 0 percent.
B) 2.5 percent.
C) 3.5 percent.
D) 5.0 percent.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Q8: According to the government budget constraint, any

Q23: Another name for a "flat-rate tax" in

Q30: Dynamic tax analysis assumes that<br>A) an increase

Q58: Using the fiscal year 2014 estimates, the

Q97: Suppose the income tax rate is 0

Q109: Explain why it is that how much

Q146: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5018/.jpg" alt=" -Which of the

Q156: <img src="https://d2lvgg3v3hfg70.cloudfront.net/TB5018/.jpg" alt=" -Using the above

Q172: Over the long run, a government's fundamental

Q196: The tax that brings in the most