Asked by Mateo Hoyos on May 08, 2024
Verified
Under a flat tax,the marginal tax rate and the average tax rate are different.
Flat Tax
A tax system with a constant rate, where taxpayers pay the same percentage of their income regardless of the level of their income.
Marginal Tax Rate
The rate at which the last dollar of income is taxed, indicating the percentage of tax applied to your income for each tax bracket in which you qualify.
Average Tax Rate
The proportion of total income paid in taxes, calculated by dividing total tax amount by total income.
- Gain insight into the foundational principles and variances between progressive, proportional, and regressive tax schemes.
- Describe the methodology for determining average and marginal tax rates and how they are associated with taxable income.
Verified Answer
MG
MEGAN GANGITANO
May 12, 2024
Final Answer :
False
Explanation :
Under a flat tax system, the marginal tax rate and the average tax rate are the same for all taxpayers. This is because there is a single tax rate applied to all income levels, regardless of how much a person earns. Therefore, both the marginal tax rate and the average tax rate would be equal to the flat tax rate in a flat tax system.
Learning Objectives
- Gain insight into the foundational principles and variances between progressive, proportional, and regressive tax schemes.
- Describe the methodology for determining average and marginal tax rates and how they are associated with taxable income.