Taxable Income and Total Tax Liability are in thousands. Ranges...
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Accounting
Taxable Income and Total Tax Liability are in thousands.
Ranges of Adjusted Gross Income
Item
Under $15,000
$15,000 to under $30,000
$30,000 to under $50,000
$50,000 to under $100,000
$100,000 to under $200,000
$200,000 or more
Number of returns
33,998,665
29,548,721
27,127,608
34,537,027
20,094,853
7,788,785
Taxable income
$
21,439,540
$
213,668,669
$
578,082,715
$
1,661,992,914
$
2,055,707,167
$
3,408,931,866
Total tax liability
$
1,891,136
$
18,881,170
$
59,565,261
$
218,856,282
$
343,280,695
$
945,200,723
Average tax rate*
8.82
%
8.84
%
10.30
%
13.17
%
16.70
%
27.73
%
*The average tax rate is total tax liability divided by taxable income.
Required:
If the federal tax system was changed to a proportional tax rate structure with a tax rate of 17%, calculate the amount of tax liability for 2017 for all taxpayers.
What is the amount and nature of difference from actual tax liability specified in the above table?
Answer & Explanation
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