The ultimate economic burden of a tax is best captured by:
A) the marginal tax rate.
B) the effective tax rate.
C) the average tax rate.
D) the proportional tax rate.
E) None of the choices are correct.

Question

Quizplus · Accepted Answer

The effective tax rate captures the actual amount of taxes paid as a percentage of income earned, taking into account any deductions or credits. It reflects the true burden of the tax on the taxpayer. The marginal tax rate only applies to the last dollar earned and does not capture the overall burden of the tax. The average tax rate and proportional tax rate do not consider any variations in income levels or deductions.

The Ultimate Economic Burden of a Tax Is Best Captured