Red, White, Blue, and Magenta have taxable income as follows:
Corporation Taxable Amount
Blue $ 91,000
White 320,000
Red 800,000
Magenta 50,000,000
a. Calculate the marginal tax rate and the effective tax rate for each of the C corporations.
b. Explain why the marginal tax rate for a C corporation can exceed 35%, but the effective tax rate cannot.