Asked by Jameka Hicks on Jun 14, 2024
Verified
Which statement is correct with respect to marginal and average tax rates under a progressive tax structure?
A) At very high levels of taxable income,a taxpayer's marginal and average tax rates will be the same.
B) At very low levels of taxable income,a taxpayer's marginal and average tax rates will be the same.
C) For most taxpayers,the average tax rate is larger than the marginal tax rate.
D) Generalizations cannot be made.The question can only be answered with reference to the tax situation of a specific taxpayer.
Progressive Tax Structure
A taxation system where tax rates increase as the taxable amount increases, resulting in higher income earners paying a larger percentage of their income in taxes.
Marginal Tax Rates
The rate at which an additional dollar of income would be taxed, which varies based on income levels and is a fundamental component of progressive tax systems.
Average Tax Rates
The ratio of the total amount of taxes paid to the total tax base (taxable income or spending), indicating the percentage of income that goes to taxes.
- Execute calculations to identify differences between marginal and average tax rates within diverse tax frameworks.
Verified Answer
Learning Objectives
- Execute calculations to identify differences between marginal and average tax rates within diverse tax frameworks.
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