Asked by Allison Wagoner on May 02, 2024
Verified
A person's marginal tax rate equals
A) her tax obligation divided by her average tax rate.
B) the increase in taxes she would pay as a percentage of the rise in her income.
C) her tax obligation divided by her income.
D) the increase in taxes if her average tax rate were to rise by 1percent.
Marginal Tax Rate
The rate at which the last dollar of income is taxed, influencing individuals' decisions on investment and labor.
Tax Obligation
The requirement for taxpayers to pay taxes due to governmental authorities based on income, consumption, property, and other relevant tax bases.
Average Tax Rate
The ratio of the total amount of taxes paid to the taxpayer's total taxable income, indicating the share of income that is taken as tax.
- Develop an insight into the aspects of marginal and average tax rates.
Verified Answer
ZK
Zybrea KnightMay 02, 2024
Final Answer :
B
Explanation :
The marginal tax rate is the rate at which your last dollar of income is taxed, essentially the percentage of tax applied to your income for each tax bracket in which you qualify. It represents the increase in taxes paid for every additional dollar earned as income.
Learning Objectives
- Develop an insight into the aspects of marginal and average tax rates.