Statement I: The average tax rate is found by dividing taxable income by taxes paid.
Statement II: Rich people generally pay a higher marginal tax rate than their average tax rate.

Question

Quizplus · Accepted Answer

Statement I is false because the average tax rate is calculated by dividing taxes paid by taxable income, not the other way around. Statement II is true as progressive tax systems typically result in higher income individuals paying a higher marginal tax rate on additional income than their average tax rate on total income.

Statement I: the Average Tax Rate Is Found by Dividing