When considering changes in tax policy, economists usually focus on
A)the average tax rate.
B)the marginal tax rate.
C)people's willingness to pay taxes.
D)people's ability to pay taxes.

Question

Quizplus · Accepted Answer

Economists usually focus on the marginal tax rate because it determines the additional amount of tax paid on each additional dollar of income earned, which has a greater impact on individuals' incentives to work and invest. The average tax rate only reflects the overall amount of taxes paid as a percentage of total income and may not capture the true impact of changes in tax policy. People's willingness and ability to pay taxes are also important factors but are not typically the main focus of tax policy analysis.

When Considering Changes in Tax Policy, Economists Usually Focus on