Asked by Risha Aprilia on Jul 16, 2024
Verified
If the ________ tax rate equals the ________ tax rate, the tax would be proportional.
A) marginal; average
B) corporate income; personal income
C) sales; personal income
D) average; variable
Marginal Tax Rate
The rate at which the next dollar of taxable income is taxed, reflecting the incremental increase in tax paid on an additional dollar of income.
Average Tax Rate
The ratio of the total amount of taxes paid to the total taxable income, representing the percentage of income paid in taxes.
Proportional Tax
A tax system where the rate of taxation is the same for all taxpayers, regardless of income or wealth.
- Comprehend the principles of marginal and average tax rates and learn how to compute them using income and tax information.
- Examine the impact of various tax frameworks (progressive, regressive, proportional) on the dispersion of income.
Verified Answer
SH
sydney harringtonJul 19, 2024
Final Answer :
A
Explanation :
A proportional tax is one where the tax rate remains constant regardless of the amount of the base subject to taxation. This occurs when the marginal tax rate (the rate on the next dollar of income earned) equals the average tax rate (total tax paid divided by total income).
Learning Objectives
- Comprehend the principles of marginal and average tax rates and learn how to compute them using income and tax information.
- Examine the impact of various tax frameworks (progressive, regressive, proportional) on the dispersion of income.