Marginal and average tax rates


If someone told you that the marginal and average tax rates both increase each time taxable income increases, would you agree? If you disagree, what is the reason?

(A) I agree.

(B) I disagree because marginal tax rates increase and decrease as taxable income increases; average tax rate increases consistently as taxable income increases.

(C) I disagree because average tax rates increase and decrease as taxable income increases; marginal tax rate increases consistently as taxable income increases.

(D) I disagree because both tax rates increase and decrease as taxable income increases.

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Accounting Basics: Marginal and average tax rates
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