What does the marginal tax rate represent?

Show Answers

The overall tax amount divided by the total earningsTotal earnings divided by the overall tax amountThe variation in tax paid divided by the variation in incomeThe variation in income divided by the variation in tax paid

Explanation

Option A describes the average tax rate, which is total tax divided by total income. Option B is the inverse of the average tax rate. Option C correctly defines the marginal tax rate as the change in tax liability over the change in income. Option D reverses the ratio and is incorrect.