Calculate marginal tax rates using R

Question

I\'m writing a function to calculate tax owed given a level of income according to Australia\'s marginal tax rates.

I\'ve written a simple version of the function that r

Answer 1

Here's a one-liner that does the trick:

income_tax <- 
function(income,
         brackets = c(18200, 37000, 80000, 180000, Inf),
         rates = c(0, .19, .325, .37, .45)) {        
    sum(diff(c(0, pmin(income, brackets))) * rates)
}

Perhaps the easiest way to see how/why it works is to play around with the core bit of logic with some simpler parameters, like this:

brackets <- c(1:5, Inf)

diff(c(0, pmin(.35, brackets)))
## [1] 0.35 0.00 0.00 0.00 0.00 0.00
diff(c(0, pmin(3.9, brackets)))
## [1] 1.0 1.0 1.0 0.9 0.0 0.0
diff(c(0, pmin(99, brackets)))
## [1]  1  1  1  1  1 94