What does the marginal tax rate represent?

Multiple choice question for Income Inequality. Select an option, then review the explanation below.

Show Answers

The rate of tax applied to each extra dollar of income you earn.The overall tax paid divided by your entire income.The extra tax paid relative to your total income.Your total earnings divided by the total tax amount paid.

Explanation

The marginal tax rate refers to the percentage of tax charged on any additional income you receive. It differs from the average tax rate, which is calculated by dividing total tax paid by total income.

Practice related questions from the same subject.

1.Which of the following best describes the Benazir Benefit Income Scheme?
2.Which category of tax does VAT best represent?
3.When a tax can be transferred, what determines the actual burden of the tax?
4.What does tax incidence refer to?
5.What does a progressive income tax system imply about the tax rate for individuals with higher earnings?

What does the marginal tax rate represent?

Explanation

More Income Inequality MCQs