Answer to Question #124317 in Macroeconomics for Jyn

Question

If marginal tax rate on individual income falls,we would expect,other things constant, individuals to?

Answer 1

Marginal tax rate refers to the rate incurred on additional dollar of income. The method of taxation is referred to as progressive taxation. Those earning lower income are taxed less as compared to those earning higher income.

When the marginal tax rate on an individual falls this means that if the individual was being taxed 0.3 on each additional income he would be charged 0.1. This would be a benefit to the tax payer since his income would increase.

In this case the tax payer would live a much better life than the previous since the marginal tax rate has fallen.