The marginal rate of tax paid is ?
Correct answer: C. Change in the tax paid / change in income
- A. The total tax paid / total income
- B. Total income / total tax paid
- C. Change in the tax paid / change in income
- D. Change in income / change in tax paid
Explanation
The marginal tax rate measures the tax on the next unit of income, so it is the change in tax paid divided by the change in income. Total tax divided by total income is the average tax rate.
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About Public Finance
Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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