Which of the following is false?
A) The average tax rate changes under a proportional tax rate structure, but it is static for a progressive tax rate system.
B) An example of a proportional tax is the tax on gasoline.
C) A proportional tax rate structure imposes a constant tax rate while a progressive tax rate structure imposes an increasing marginal rate related to the tax base.
D) An example of a progressive tax is the federal tax on gifts.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The statement that the average tax rate is static for a progressive tax rate system is false. In a progressive tax system, the average tax rate increases as income increases due to the higher marginal tax rates on higher income levels.

Which of the Following Is False