If taxes are $2,000 when income is $15,000 and they are $3,000 when income is $19,000, then the marginal tax rate is

Question

Quizplus · Accepted Answer

Marginal tax rate is the tax rate that is applied to the last unit of income earned.

The change in taxes is $1,000 ($3,000 - $2,000) and the change in income is $4,000 ($19,000 - $15,000).

Thus, the marginal tax rate can be calculated as:

Marginal tax rate = change in taxes / change in income
= $1,000 / $4,000
= 0.25 or 25%

Therefore, the answer is B.

If Taxes Are $2,000 When Income Is $15,000 and They