Assume the marginal tax rate is 12% for the first $40,000 of taxable

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4. Assume the marginal tax rate is 12% for the first $40,000 of taxable income, 28% for taxable income from $40,001 to $100,000, and 30% for taxable income above $100,000. If Mr. Smith had taxable income of $120,000, how much tax does he owe? 

 

A. $27,600

 

B. $33,600

 

C. $34,000

 

D. $36,000

 

 

In question 4, what is Mr. Smith’s nominal tax rate?

 

A. 12%

 

B. 23%

 

C. 28%

 

D. 30%