If a taxpayer's total tax liability is $4,000,taxable income is $20,000,and total economic income is $40,000,then the effective tax rate is 20 percent.

Name: If a taxpayer's total tax liability is $4,000,taxable income is $20,000,and total economic income is $40,000,then the effective tax rate is 20 percent.
Brand: Quizplus
Rating: 4.8 (35 reviews)

Question

Quizplus · Accepted Answer

The effective tax rate is calculated by dividing the total tax liability by the total economic income, not the taxable income. Here, it would be $4,000 / $40,000 = 10%.

If a Taxpayer's Total Tax Liability Is $4,000,taxable Income Is