Suppose the government imposes a tax of 32 per cent on the first $40 000 of income, and 45 per cent on all income above $40 000, what is the marginal tax rate when income is $80 000?

Question

Quizplus · Accepted Answer

The marginal tax rate is the rate at which additional income is taxed. Since the tax rate increases from 32% to 45% on income above $40,000, the marginal tax rate at $80,000 would be 45%.

Suppose the Government Imposes a Tax of 32 Per Cent