Question

Average corporate tax rates   Using the corporate tax rate schedule given here LOADING... ​, perform the​ following: a. Calculate the tax​ liability, after-tax​ earnings, and average tax rates for the following levels of corporate earnings before​ taxes: $10,900​; $78,900​; $303,000​; $499,000​; $1.3 ​million; $9.6 ​million; and $20.4 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?

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