Which of the following statements describes the correct relationship between marginal and average tax rates in a progressive tax system?
A)The marginal tax rate is higher than the average tax rate.
B)The average tax rate is higher than the marginal tax rate.
C)The marginal and average tax rates are the same.
D)The average tax rate will always be half of the marginal tax rate.

Question

Quizplus · Accepted Answer

In a progressive tax system, as income increases, the marginal tax rate (the rate on the next dollar earned) exceeds the average tax rate (total tax paid divided by total income), because higher income is taxed at higher rates.

Which of the Following Statements Describes the Correct Relationship Between