If Susan's income increases from $40,000 to $50,000 and her tax liability increases from $6,000 to $9,000, which of the following is true?
A) Her marginal tax rate is 18 percent in this range.
B) Her marginal tax rate is 30 percent in this range.
C) Her average tax rate was 22.5 percent when her income was $40,000.
D) The tax structure must be regressive in the range between $40,000 and $50,000.

Question

Quizplus · Accepted Answer

To calculate Susan's marginal tax rate, we need to find the change in tax liability divided by the change in income.

Marginal tax rate = (Change in tax liability / Change in income) x 100%

Marginal tax rate = (($9,000 - $6,000) / ($50,000 - $40,000)) x 100% = (3,000 / 10,000) x 100% = 30%

Therefore, the correct answer is (B).

Choice (A) is incorrect because 18 percent is not the correct marginal tax rate.

Choice (C) is also incorrect because we do not have enough information to calculate Susan's average tax rate when her income was $40,000.

Choice (D) is incorrect because we do not have enough information to determine whether the tax structure is regressive or not.

If Susan's Income Increases from $40,000 to $50,000 and Her