ECON1001 Study Guide - Quiz Guide: Tax Rate, Regressive Tax, Progressive Tax

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14 Jun 2020
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Which of these is the definition of a marginal tax rate?
Select one:
a. The tax rate you pay on the last dollar you earn
b. The portion of your income you pay in tax divided by our total income
c. The tax rate you pay at each income bracket
d. The tax rate you pay on the next dollar you earn
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Your answer is correct.
Marginal tax is paid on the next dollar you earn. It typically increases in brackets, but it is not the
brackets themselves. Average tax is the portion of your income you pay in tax divided by your
total income.
The correct answer is: The tax rate you pay on the next dollar you earn
Question 2
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Question text
Which of these is the definition of an average tax rate?
Select one:
a. The tax rate you pay on the next dollar you earn
b. The tax rate you pay on the last dollar you earn
c.
The portion of your income you pay in tax divided by our total income
d. The tax rate you pay at each income bracket
Feedback
Your answer is correct.
Marginal tax is paid on the next dollar you earn. It typically increases in brackets, but it is not the
brackets themselves. Average tax is the portion of your income you pay in tax divided by your
total income.
The correct answer is:
The portion of your income you pay in tax divided by our total income
Question 3
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Question text
Given the following tax schedule, what is the
marginal tax rate paid
by someone earning $120
000?
Taxable Income
Tax on this Income
$0 - $18200
Nil
$18201 - $37000
19c for each $1 over $18200
$37001 - $90000
$3572 + 32.5c for every $1 over $37000
$90001 - $180000
$3572 + $17225 + 37c for every $1 over $90000
$180001+
$3572 + 17225 + 33300 plus 45c for every $1 over $180000
Select one:
a. 37 cents on the dollar
b.
29.5 cents on the dollar
c. 32.5 cents on the dollar
d.
19c for each $1 over $18200, 32.5c for every $1 over $37000, and 37c for every $1 over $90000
Feedback
Your answer is correct.
The marginal tax rate is paid on the next dollar you earn. Here that would 120001, which falls in
the 4th bracket and would thus be taxed at 37c/dollar.
The correct answer is: 37 cents on the dollar
Question 4
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Question text
Given the following tax schedule, what is the
total tax paid
by someone earning $120 000?
Taxable Income
Tax on this Income
$0 - $18200
Nil
$18201 - $37000
19c for each $1 over $18200
$37001 - $90000
$3572 + 32.5c for every $1 over $37000
$90001 - $180000
$3572 + 17225 + 37c for every $1 over $90000
$180001+
$3572 + 17225 + 33300 + 45c for every $1 over $180000
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