In the United States, higher income households face ________ marginal tax rates, and therefore have ________ incentives to seek deductions of various sorts.

A) higher; fewer
B) higher; more
C) lower; fewer
D) lower; more

Marginal Tax Rates

The rate at which your income above a certain threshold is taxed, showing the tax imposed on the incremental dollar of income.

Deductions

Amounts subtracted from gross income to determine taxable income, potentially reducing the amount of tax owed.