Answer the question on the basis of the following data: $$\begin{array} { c c }
\text { Taxable Income } & \text { Total Tax } \
\hline
\$ 1,000 & \$ 0 \
2,000 & 100 \
3,000 & 300 \
4,000 & 600 \
5,000 & 1,000 \
6,000 & 1,500
\end{array}$$ Refer to the given data.If your taxable income increases from $4,000 to $5,000,you will encounter a marginal tax rate of:

Question

Answer the question on the basis of the following data: $$\begin{array} { c c } 
\text { Taxable Income } & \text { Total Tax } \
\hline
\$ 1,000 & \$ 0 \
2,000 & 100 \
3,000 & 300 \
4,000 & 600 \
5,000 & 1,000 \
6,000 & 1,500
\end{array}$$ Refer to the given data.If your taxable income increases from $4,000 to $5,000,you will encounter a marginal tax rate of:

Quizplus · Accepted Answer

The marginal tax rate is calculated by the increase in tax divided by the increase in income. From $4,000 to $5,000, the tax increases from $600 to $1,000, which is a $400 increase on a $1,000 increase in income, resulting in a 40% marginal tax rate (400/1000 = 0.4 or 40%).

Answer the Question on the Basis of the Following Data