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Chapter 6: Q. 6.13 (page 141)

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

Short Answer

Expert verified

25%

Progressive

Step by step solution

01

Step1. Given information

Taxable income in 2017: $5,000,000

Taxable income in 2018: $6,000,000

Taxes due in 2017: $250,000

Taxes due in 2018: $500,000

02

Step2. Calculation

Marginal tax rate:

Change in due taxes/ change in taxable income

250000/1000000= 25%

Since, this is higher than the average tax rates, the tax rate can be called as progressive.

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