Clarity Music Company has a marginal tax rate of 34 percent and an average tax rate of 32 percent this year. It is planning to construct a new recording studio next year. The appropriate tax rate to be applied on the income generated from the new studio is:

Question

Quizplus · Accepted Answer

Since the new recording studio will generate additional income, it will be subject to the highest tax rate, which is the marginal tax rate. Thus, the appropriate tax rate to be applied on the income generated from the new studio is the marginal tax rate.

Clarity Music Company Has a Marginal Tax Rate of 34