Statement I: Most Poor People Have an Average Tax Rate

question 107

Multiple Choice

Statement I: Most poor people have an average tax rate of 10 percent.
Statement II: In 1992 the maximum federal personal income tax rate was 31 percent.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

---

Definitions:

Book Income

The income reported by a company according to accounting principles, often different from taxable income due to timing and valuation differences.

Taxable Income

The amount of income that is used to calculate an individual or a company's income tax liabilities.

Temporary Difference

A discrepancy between the book value of assets and liabilities for financial reporting purposes and their value for tax purposes, resulting in deferred tax assets or liabilities.

Book Income

The income reported by a company in its financial statements, in contrast to taxable income calculated for tax purposes.