Asked by Alexis Karageanes on May 04, 2024
Verified
If Mary earns $80,000 in taxable income and pays $40,000 in taxes, her marginal tax rate must be 50 percent.
Marginal Tax Rate
The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.
Taxable Income
The portion of an individual's or corporation's income used to determine how much tax is owed to the government in a specific tax year.
- Understand the notion and consequences of deadweight loss in taxation.
Verified Answer
DM
Dr. Maria KhalidMay 05, 2024
Final Answer :
False
Explanation :
Marginal tax rate refers to the rate at which the last dollar of income is taxed, not the overall percentage of income paid in taxes. Mary's overall tax rate is 50% based on the given numbers, but her marginal tax rate could be different depending on the tax brackets she falls into.
Learning Objectives
- Understand the notion and consequences of deadweight loss in taxation.