Under a flat tax:
A) the marginal tax rate is zero, but the average tax rate is one.
B) people with higher incomes pay less tax dollars.
C) the average tax rate is the same for people with different income levels.
D) the amount of tax payment is the same for people with different income levels.

Question

Quizplus · Accepted Answer

Under a flat tax system, everyone pays the same percentage rate of their income, regardless of how much they make. This means that the average tax rate is the same for people with different income levels. However, the amount of tax payment will still differ based on each person's income, making option D incorrect. Option A is also incorrect as there is still a marginal tax rate, just not a progressive one. Finally, option B is incorrect because people with higher incomes would still pay a larger amount in taxes, even if the rate was the same percentage for everyone.

Under a Flat Tax