For an individual with a taxable income of $50,000 and tax payable of $7,500, what is the ART?

The Average Rate of Tax (ART) is calculated by dividing the total tax payable by the taxable income and then converting that figure into a percentage. In this case, the individual has a taxable income of $50,000 and tax payable of $7,500.

To find the ART, use the formula:

[

ART = \left( \frac{\text{Tax Payable}}{\text{Taxable Income}} \right) \times 100

]

Substituting the given values:

[

ART = \left( \frac{7,500}{50,000} \right) \times 100

]

Calculating the fraction gives 0.15, and multiplying this by 100 converts it to a percentage:

[

ART = 0.15 \times 100 = 15%

]

Therefore, the Average Rate of Tax for this individual is 15%. This means that, on average, the individual pays 15% of their taxable income in taxes. This method of calculating ART is important for understanding the overall tax burden relative to income, helping taxpayers assess how much they are effectively paying in taxes.