Taxes: Combined Tax Rate

If you face a federal corporate tax rate of 35% and a combined tax rate of 58%, what is the implicit state tax rate?

Answer:

tm= combined tax rate
tf = corporate tax rate
ts = state tax rate

tm = tf+ts - (tf)(ts)

Attack with algebra:

.58 = .35+ts -.35(ts)
.58-.35=-.35ts+ts
.23=.65ts
.23/.65 =ts
.3538=ts

Multiply by 100 to get the %

The state tax rate is 35.38%

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