With a lump-sum tax,how is the average tax rate evaluated
A)The average tax rate is always equal to zero.
B)The average tax rate is always less than the marginal tax rate.
C)The average tax rate falls as income rises.
D)The average tax rate rises as income rises.

Question

Quizplus · Accepted Answer

A lump-sum tax is a fixed amount, regardless of income. As income rises, the average tax rate (tax paid divided by income) decreases because the fixed tax becomes a smaller proportion of the higher income.

With a Lump-Sum Tax,how Is the Average Tax Rate Evaluated