Which of the following best describes the marginal tax rate? It is the basic earning that...
Which of the following best describes the marginal tax rate?
It is the basic earning that is taxable.
It is the basic earning that is exempt from tax.
It is the percentage of benefits within a salary that is exempt from tax.
It is the percentage of additional earnings that goes to taxes.
It is the percentage of pension that goes to taxes.
Homework Answers
It is the percentage of additional earnings that goes to taxes.
Marginal tax is that type of tax that is charged upon the additional earning of the income. Hence, more the income, higher is the marginal tax upon the same. Marginal tax rate is not that rate of tax that is charged upon the basis earning directly but is that which is charged upon the additional earnings and hence the low-income category of Public is free from such a tax. Marginal tax rate is progressive in nature and since it is the portion that is charged upon the additional earnings of the Public, it ensures the equitability factor in the country as well. However, it is not that the basic income is exempted from the tax, it only implies that the same shall be considered once the income earned is more than that of the basic one in nature. Marginal tax rate is neither that percentage of benefits within the salary that is exempted from tax nor a percentage of pension that shall be necessarily taxable. Hence the best option that describes the marginal tax rate is’ It is the percentage of additional earnings that goes to taxes’.
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Which of the following best describes the marginal tax rate?
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