If we are trying to gauge how much the income tax system distorts incentives, then:
A)the average tax rate is the most meaningful measure
B)the distortion is entirely captured in the administrative burden of the tax
C)total tax revenue collected is the most meaningful measure
D)the marginal tax rate is the most meaningful measure

Question

Quizplus · Accepted Answer

The marginal tax rate refers to the tax rate paid on an additional unit of income, which is the rate that affects people's decisions to work and earn more. It is therefore the most meaningful measure for gauging how much the income tax system distorts incentives. The average tax rate and total tax revenue collected do not give as much information on how the system affects people's behavior, and the administrative burden of the tax is a separate issue from its incentive effects.

If We Are Trying to Gauge How Much the Income