A corporation's average tax rate will always be lower than or equal to its marginal tax rate.

Question

Quizplus · Accepted Answer

This is because the average tax rate is the total tax paid divided by the total income, while the marginal tax rate is the tax rate applied to the last dollar earned. Therefore, the average tax rate includes all income and applicable tax rates, while the marginal tax rate only applies to the highest income bracket. Because tax rates increase as income increases, the marginal tax rate will always be higher than the average tax rate.

A Corporation's Average Tax Rate Will Always Be Lower Than