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Chapter 6: Q. 6.11 (page 140)

What was the individual's marginal state income tax rate in 2018? Did this individual experience proportional, progressive, or regressive taxation? Explain briefly.

Short Answer

Expert verified

Marginal tax rate: 2.5%

Proportional

Step by step solution

01

Step1. Given information

Taxable income in 2017: $200,000

Taxable income in 2018: $220,000

Taxes due in 2017: $5000

Taxes due in 2018: $5500

02

Step2. Calculation

Marginal tax rate:

Change in due taxes/ change in taxable income

500/20000= 2.5%

Since, this is same as the average tax rates of the corresponding years, it is proportional tax change.

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