Which of the following is correct?
A) If your income is $20,000 and you are paying $2,000 in taxes, your marginal tax rate is 10 percent.
B) If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is progressive.
C) If you paid $0.39 as tax from an additional dollar you earned, your marginal tax rate is 39 percent.
D) If your marginal tax rate falls as your income increases, the tax is progressive.
E) If your income is $20,000 and you are paying $2,000 in income taxes, the income tax you are paying is proportional.

Question

Quizplus · Accepted Answer

Marginal tax rate is the rate at which an additional dollar of income is taxed. In this case, if $0.39 is paid as tax on an additional dollar earned, the marginal tax rate is 39 percent.

Answer: D
 A progressive tax is one in which the marginal tax rate increases as income increases. If the marginal tax rate falls as income increases, the tax is not progressive.

Therefore, the correct choices are C and D.

Which of the Following Is Correct