The marginal tax rate serves as a measure of the extent to which the tax system discourages people from working.

Question

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The marginal tax rate, which is the rate on the next dollar of income earned, can affect individuals' incentives to work more hours or pursue additional income, as higher marginal rates reduce the after-tax return on earning more income, potentially discouraging additional work.

The Marginal Tax Rate Serves as a Measure of the Extent