Question

For a progressive tax the: select one:

a. average tax rate exceeds the marginal tax rate as income rises.
b. marginal tax rate declines as income increases.
c. average and marginal tax rates are equal.
d. marginal tax rate exceeds the average tax rate as income rises.

Answer 1

Answer : D: Marginal tax rate exceeds the average tax rate as income rises

In a progressive tax system as the income rises, the marginal tax bracket moves up whereas the average tax will be lower. Hence marginal tax rate will exceed the average tax rate