Assume a small town decides to build a park by imposing a $2,000 lump-sum tax on each household. If a household's income rises from $50,000 to $75,000, its marginal tax rate is:
A)0%
B)2.67%
C)4%
D)8%

Question

​Assume a small town decides to build a park by imposing a $2,000 lump-sum tax on each household. If a household's income rises from $50,000 to $75,000, its marginal tax rate is:
A)​0%
B)​2.67%
C)​4%
D)​8%

Quizplus · Accepted Answer

A lump-sum tax is a fixed amount that does not change with income, so the marginal tax rate, which is the rate of tax applied to the next dollar of income, is 0%.

​Assume a Small Town Decides to Build a Park by Imposing

Assume a Small Town Decides to Build a Park by Imposing