Multiple Choice
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.
Correct Answer:
Verified
Correct Answer:
Verified
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