Asked by Doris Mansueto on Jun 19, 2024
Verified
Claire Quinn has a marginal tax rate of 33 percent on her federal personal income tax.Her average tax rate is
A) more than 33%.
B) also 33%.
C) less than 33%.
D) zero.
Marginal Tax Rate
The rate at which the last dollar of income is taxed, indicating the percentage of an additional dollar of earnings that will be paid in tax.
Average Tax Rate
The average tax rate is the portion of total income that is paid as taxes, calculated by dividing the total taxes paid by the total income.
- Acknowledge how taxes affect individuals across different income levels.
Verified Answer
A5
Albert 5.0FordJun 22, 2024
Final Answer :
C
Explanation :
The average tax rate is calculated by dividing the total tax paid by the total income. As the marginal tax rate only applies to the income that falls within that tax bracket, it will be lower than the average tax rate. Therefore, Claire's average tax rate will be less than 33%.
Learning Objectives
- Acknowledge how taxes affect individuals across different income levels.