As of 2011, which one of the following statements concerning U.S. corporate income taxes is correct?

Question

Quizplus · Accepted Answer

A firm's tax is computed on an incremental basis, meaning that it pays taxes on each additional dollar of income earned rather than on the total amount of income earned. This is different from a flat tax, where the same tax rate is applied to all income levels, or a regressive tax, where the tax rate decreases as income rises. Option A is not true, as the largest corporations often have effective tax rates lower than the statutory rate of 35 percent. Options B and D are also incorrect, as the marginal tax rate is the rate applied to the last dollar earned, while the average tax rate is the total taxes paid divided by the total income earned. Finally, option E is incorrect, as the relevant tax rate to use when analyzing a project is the marginal tax rate, not the average tax rate.

As of 2011, Which One of the Following Statements Concerning