Question

In which case will the government collect more tax revenue?

		5% tax rate and $200,000 average income
		10% tax rate and $120,000 average income
		50% tax rate and $50,000 average income
		70% tax rate and $20,000 average income

Answer 1

Answer
average tax amount =tax rate*average income
the total tax amount is average tax amount *population
the total tax will increase if the average tax amount is highest

tax rate =5% and AI=200000
average tax amount =0.05*200000
=$10000

tax rate =10% and AI=120000
average tax amount =10*120000
=$12000

tax rate =50% and AI=50000
average tax amount =0.5*50000
=$25000

tax rate =70% and AI=20000
average tax amount =0.7*20000
=$14000

the average tax amount is highest in option 3 so the government collect more tax revenue if 50% tax rate and $50,000 average income