Asked by Shyla Schneider on May 06, 2024
Verified
Statement I: The average tax rate is found by dividing taxable income by taxes paid.
Statement II: Rich people generally pay a higher marginal tax rate than their average tax rate.
A) Statement I is true and statement II is false.
B) Statement II is true and statement I is false.
C) Both statements are true.
D) Both statements are false.
Marginal Tax Rate
The rate at which the last dollar of a taxpayer's income is taxed, indicating the proportion of any additional income that will be taken in taxes.
Average Tax Rate
A calculation resulting from dividing an individual's or entity's total tax payments by their total taxable income, indicating the portion of income paid in taxes.
- Discern the impact of fiscal policies on distinct economic groups.
Verified Answer
LB
Lashanda BarnesMay 12, 2024
Final Answer :
B
Explanation :
Statement I is false because the average tax rate is calculated by dividing taxes paid by taxable income, not the other way around. Statement II is true as progressive tax systems typically result in higher income individuals paying a higher marginal tax rate on additional income than their average tax rate on total income.
Learning Objectives
- Discern the impact of fiscal policies on distinct economic groups.