Asked by
Marucs Zhang
on Nov 26, 2024Verified
The average tax rate is
A) equal to the change in taxes/change in taxable income.
B) equal to total taxes/total taxable income.
C) the sum of the marginal tax rate and the rate of transfer payments.
D) the tax on incremental income less the tax on total income.
Average Tax Rate
The percentage of gross income that goes towards tax payments, determined by dividing the sum of taxes paid by the gross income.
Taxable Income
The amount of income used to calculate how much the government can tax an individual or a corporation.
Marginal Tax Rate
The rate at which the last dollar of income is taxed, indicating the impact of additional income on tax liability.
- Compute and elucidate the significance of marginal and average tax rates.
Verified Answer
MF
Learning Objectives
- Compute and elucidate the significance of marginal and average tax rates.