How are exemptions and deductions used?
A) By taxpayers to reduce the amount of taxable income
B) To add to taxes that must be paid
C) To determine the type of tax structure
D) To determine what items are subject to sales taxes
Which formula below would a taxpayer use to calculate an average tax rate?
A) Taxes paid/total taxable income
B) Total taxable income/taxes paid
C) Total taxable income × taxes paid
D) Total taxable income - taxes paid)/taxable income
Which formula below would a taxpayer use to calculate marginal tax rate?
A) Total taxable income ÷ by taxes paid
B) Taxes paid ÷ total taxable income
C) Change in taxes paid ÷ the change in total taxable income
D) (Total taxable income - taxes paid) / taxable income
A marginal tax rate is
A) the fraction of income that must be paid in taxes.
B) the fraction of each additional dollar of income that must be paid in taxes.
C) the incremental income one must earn to offset each additional dollar of tax.
D) the ratio of a change in income to a change in taxes paid.