Marginal tax rates and average tax rates are rarely the same. What happens to the relationship between marginal tax rates and average tax rates as incomes rise in the highest tax brackets?
What will be an ideal response?
The average tax rate begins to become closer and closer to the marginal tax rate in the highest tax brackets. The reason is that the marginal rate on the last dollars earned raises the average tax rate. Since fewer dollars as a percentage of income are taxed at lower rates the average begins to converge to the marginal rate.
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To maximize its profit, the firm in the figure above produces ________ cans per day and ________
A) 0; incurs an economic loss of less than $20 B) between 3 to 5 cans; earns a normal profit C) 10; earns an economic profit of $2.90 D) 10; earns an economic profit of $29 E) more than 10; earns an economic profit
At what price level does equilibrium occur in Figure 8.4?
A. P1. B. P2. C. P3. D. P4.