If Sally were to get a $3,000 bonus from her employer, which of the following tax rates would most accurately reflect the percent of this additional income that she would owe in taxes?
A) her marginal tax rate
B) her average tax rate
C) her progressive tax coefficient
D) the rate of excess burden

Question

Quizplus · Accepted Answer

Sally's marginal tax rate is the rate at which her last dollar of income earned (in this case, the $3,000 bonus) would be taxed. This rate is typically higher than her average tax rate, which is the total tax paid divided by total income earned. The progressive tax coefficient and the rate of excess burden are not relevant in determining the taxes owed on Sally's bonus income.

If Sally Were to Get a $3,000 Bonus from Her