Asked by Sherry Smith on Apr 25, 2024
Verified
The marginal tax rate for a lump-sum tax
A) is always positive.
B) is always negative.
C) is zero.
D) can take on any value but must be greater than the average tax rate.
Marginal Tax Rate
The rate at which the last dollar of income is taxed, indicating the proportion of any additional dollar of income that will be taken as tax.
Lump-Sum Tax
A tax that is a fixed amount, not dependent on the taxpayer's income level or assets' value.
Average Tax Rate
The fraction of total income that is paid in taxes, calculated by dividing the total taxes paid by the total taxable income.
- Comprehend the principles of marginal and average tax rates.
- Determine the different categories of taxes and their identifying attributes.
Verified Answer
HC
Hannah Chaney5 days ago
Final Answer :
C
Explanation :
The marginal tax rate for a lump-sum tax is zero because a lump-sum tax is a fixed amount and does not change with the income level, meaning the additional tax paid on an additional dollar of income is zero.
Learning Objectives
- Comprehend the principles of marginal and average tax rates.
- Determine the different categories of taxes and their identifying attributes.