Suppose That the Government Taxes Income as Follows: Each Taxpayer

Multiple Choice

Suppose that the government taxes income as follows: each taxpayer pays $2,000 in taxes,regardless of income.In addition,people who earn over $20,000 pay 40 percent of their total income in taxes.Which of the following statements is not correct?

A) The $2,000 is a lump-sum tax.
B) For people earning less than $20,000, the marginal tax rate is zero.
C) For people earning $50,000, the average tax rate is 40 percent.
D) For people earning over $50,000, the marginal tax rate is 40 percent.