Chrysler engineers helped Toyota develop its Sienna minivan. In return, Toyota provided input on automobile production techniques to Chrysler. Why do you think Chrysler was willing to share its minivan know-how with a key competitor?

According to the U.S. tax rate schedule for 2021, Chuck's taxable income puts him in the 22% tax bracket. So, his federal tax owed on the $75,000 in taxable income alone would be ($14,200 + 22% of income over $40,525) or $14,200 + 22%*$34,475 = $14,200 + $7,584.50 = $21,784.50. Adding the $10,000 in interest income, his total taxable income becomes $85,000. Chuck's average tax rate is calculated by dividing his total tax liability ($21,784.50) by his taxable income ($85,000), which is 0.256, or 25.6%. His effective tax rate is calculated by dividing his total tax liability ($21,784.50) by his total income ($85,000), which is 0.256, or 25.6% (the same as his average tax rate). His current marginal tax rate is 22%. If he earns an additional $40,000 in taxable income, it will push him into the 24% tax bracket. So, his marginal tax rate on this income will be 24%. If instead he had $40,000 of additional deductions, it would lower his taxable income to $45,000, keeping him in the 22% tax bracket. Therefore, his marginal tax rate would remain at 22%.