Question 38
Public FinanceThe average tax rate is defined as
- A.total tax rate less the marginal tax rate
- B.the tax rate which applies to additional value of income
- C.the ratio of total taxes paid to total income
- D.marginal tax rate for being progressive
Show the answer and explanation
Answer: C (the ratio of total taxes paid to total income)
Explanation
Average tax rate = total tax paid ÷ total income; the rate on additional income is the marginal rate.