Question

    In which type of tax is the marginal tax rate higher

    than the average tax rate?
    A Digressive Correct Answer Incorrect Answer
    B Proportional Correct Answer Incorrect Answer
    C Regressive Correct Answer Incorrect Answer
    D Progressive Correct Answer Incorrect Answer
    E None of the above Correct Answer Incorrect Answer

    Solution

    The highest dollar earned will fall into a higher tax bracket. This means that your marginal tax rate will likely be higher than your effective tax rate, which is the average rate you pay on all your income. This method of taxation is known as progressive taxation.

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