Which one of the following statements related to taxes is correct? 1. The margin
ID: 2666261 • Letter: W
Question
Which one of the following statements related to taxes is correct?1. The marginal tax rate must be equal to or lower than the average tax rate for a firm.
2. The tax for a firm is computed by multiplying the firm's current marginal tax rate times the taxable income.
3. Additional income is taxed at a firm's average tax rate.
4. Given the corporate tax structure in 2008, the highest marginal tax rate if equal to the highest average tax rate.
5. The marginal tax rate for a firm can either be higher or lower than the average tax rate.
Explanation / Answer
4. Given the corporate tax structure in 2008, the highest marginal tax rate if equal to the highest average tax rate.