Suppose a flat tax plan allows individuals to deduct a standard allowance of $25,000 from their wages and the flat tax rate is 10 percent. Above $25,000 in wages, the average tax rate:

Question

Quizplus · Accepted Answer

The average tax rate increases with income because the flat tax is applied only to income above the $25,000 deduction, so as income increases, the proportion of income taxed increases, raising the average tax rate.

Suppose a Flat Tax Plan Allows Individuals to Deduct a Standard