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If You Would Have to Pay $5,000 in Taxes on a $25,000

Question 27

Multiple Choice

If you would have to pay $5,000 in taxes on a $25,000 taxable income and $7,000 on a $30,000 taxable income, then the marginal tax rate on the additional $5,000 of income is


A) 40 percent, and the average tax rate is about 23 percent at the $30,000 income level.
B) 50 percent, and the average tax rate is 40 percent at the $30,000 income level.
C) 40 percent, and the average tax rate is 25 percent at the $25,000 income level.
D) 30 percent, but average tax rates cannot be determined from the information given.

Correct Answer:

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