Asked by Queen Nahnuh on May 06, 2024
Verified
What is the marginal tax rate of a lump-sum tax of $5,000?
Marginal Tax Rate
The rate of tax applied to the last dollar of income, indicating how much of any additional income will be taken as tax.
Lump-Sum Tax
A tax that is a set amount, no matter the taxpayer's income level or economic activity.
- Elucidate core concepts in taxation, including marginal tax rate, horizontal equity, and the justification for specific taxes.
Verified Answer
AM
Asive MadladlaMay 12, 2024
Final Answer :
The marginal tax rate would be $0 because once a person paid the lump-sum tax of $5,000, she would pay no additional tax on the next dollar earned.
Learning Objectives
- Elucidate core concepts in taxation, including marginal tax rate, horizontal equity, and the justification for specific taxes.