Assume that in year 1 you pay an average tax rate of 20 percent on a taxable income of $20,000. In year 2, you pay an average tax rate of 25 percent on a taxable income of $30,000. Assuming no change in tax rates, the marginal tax rate on your additional
$10,000 of income is:
A. 5 percent.
B. 12 percent.
C. 35 percent.
D. 42 percent.
Answer: C
Economics
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