The average tax rate is the
A) percentage of an additional dollar of income paid in tax.
B) percentage of income paid in tax.
C) total amount of taxes paid by an individual.
D) average of the rates at which income and taxes increase.
E) same as the marginal tax rate for a progressive tax.

Question

Quizplus · Accepted Answer

The average tax rate is calculated by dividing the total amount of taxes paid by an individual by their taxable income. This gives the percentage of income paid in tax, which is the definition provided in option B. Option A refers to the marginal tax rate, which is the percentage of an additional dollar of income that is paid in tax. Option C refers to the total amount of taxes paid, which is not the same as the average tax rate. Option D is a confusing statement that doesn't accurately describe the average tax rate. Option E refers to the marginal tax rate again, but specifies that it applies only to a progressive tax system.

The Average Tax Rate Is the