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      Question

      To gauge the sacrifice made by a taxpayer, we should use

      the _____ tax rate. 
      A marginal Correct Answer Incorrect Answer
      B average Correct Answer Incorrect Answer
      C sales Correct Answer Incorrect Answer
      D lump-sum Correct Answer Incorrect Answer

      Solution

      The sacrifice made by a taxpayer refers to the overall burden of taxation borne by the taxpayer. This is measured by the average tax rate, which shows the proportion of total income paid as tax. Average Tax Rate=(Total Income/Total Tax Paid​)×100 Marginal tax rate measures the tax on an additional unit of income and is used to analyze incentives and disincentives to work, save, or invest. Average tax rate measures the total sacrifice or burden imposed by the tax system.

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