Question

Under a progressive tax system, Elaine earned a salary for the year that placed her in a tier that paid a marginal tax rate of 40 percent for all income earned over $150,000 but less than $415,000. Which of the following statements is true?a. Elaine earned greater than $415,000b. Elaine earned less than $150,000c. Elaine's average tax rate was greater than 40% percentd. Elaine earned a $272,000 salarye. Elaine's average tax rate was less than 40%

Answer 1

Elaine's average tax rate was less than 40%

Step-by-step explanation:

The marginal tax rate is the rate at which tax is paid in a specific bracket which is less than any defined income level. On the other hand, the overall tax rate is proportional to the total income tax paid divided by the total sales.

Therefore, since it is a progressive tax structure that requires more income than tax, it suggests that the maximum rate at which Tax is levied is 40 percent, which in the lower income brackets would be lower.

Therefore, the total taxes collected in absolute terms will be less than 40% of the overall income.

Hence, the last option is correct