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One of the most revolutionary impacts computer technology has had on business has been to:
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1. Introduction to Microeconomics
Introduction to Economics
Scelta multipla
A tax where the marginal tax rate increases as income rises is a(n):
A
lump-sum tax
B
progressive tax
C
regressive tax
D
proportional tax
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Understand the definition of a marginal tax rate: it is the rate of tax applied to each additional dollar of income earned.
Recall the characteristics of different types of taxes: a lump-sum tax is a fixed amount regardless of income; a proportional tax charges the same percentage of income at all levels; a regressive tax imposes a lower tax rate as income increases.
Identify that a tax where the marginal tax rate increases as income rises means higher income earners pay a higher percentage on their additional income.
Recognize that this description matches a progressive tax, where the tax rate increases with income.
Conclude that the tax described is a progressive tax because its marginal tax rate rises with income.
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