Assume That in Year 1 Your Average Tax Rate Is

question 14

Multiple Choice

Assume that in year 1 your average tax rate is 20 percent on a taxable income of $20,000. If the marginal tax rate on the next $10,000 of taxable income is 30 percent, what will be the average tax rate if your taxable income rises to $30,000?

• A) 7 percent
• B) 30 percent
• C) about 16 percent
• D) about 23 percent