If a Family Earned an Additional $6,000 And, as a Consequence

question 74

Multiple Choice

If a family earned an additional $6,000 and, as a consequence, sustained a reduction of $3,600 in government benefits, the implicit marginal tax rate for this family would be

• A) zero.
• B) 45 percent.
• C) 60 percent.
• D) 75 percent.

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Definitions:

Taxable Income

The amount of income used to calculate how much tax an individual or a company owes to the government.

Total Tax

The combined amount of all taxes owed by an individual or corporation in a given year, including federal, state, and local taxes.

Retained Earnings

Retained earnings are the portion of a company's profits that is kept or retained within the business for reinvestment or to pay debt, rather than being distributed to shareholders as dividends.

Liability

A company's legal financial debts or obligations that arise during the course of business operations.