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Calculate the average and the marginal tax rates in the following table, and indicate whether the tax is progressive, proportional, or regressive. What observation can you make concerning the...

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Calculate the average and the marginal tax rates in the following table, and indicate whether the tax is progressive, proportional, or regressive. What observation can you make concerning the relationship between marginal and average tax rates?

Answered Same Day Dec 25, 2021

Solution

David answered on Dec 25 2021
123 Votes
The requisite table is shown below.
Income Tax paid Average tax rate Marginal tax rate
0 0 0% 0%
100 10 10% 10%
200 30 15% 20%
300 60 20% 30%
400 100 25% 40%
500 150 30% 50%
Average tax rate = Tax paid /Income
Marginal tax rate = Incremental tax paid/Incremental income
The tax...
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