Q&A Hero

Q: Which of the following is not one of the concerns of some policymakers and economists that the increase in the share of income earned by the 1 percent is damaging to the country? A) The higher incomes of the 1 percent may give them disproportionate political influence through campaign contributions. B) Countries with high levels of income inequality have lower growth rates than do countries with more equal distributions of income. C) further increases in marginal tax rates may reduce work, saving, and investment, thereby reducing economic growth. D) Rising income inequality can lead to political unrest.

Q: Between 1980 and 2011, income inequality in the United States has increased in part due to expanding international trade. How does expanding international trade contribute to income inequality? A) It increases the demand for a wide array of products which in turn increases prices beyond the reach of average income individuals. B) It allows producers to exploit workers and reduce the wages they are willing to pay workers. C) Domestic firms can now hire low-skilled workers anywhere in the world, putting U.S. workers in competition with foreign workers. This has caused the wages of unskilled workers to be depressed relative to the wages of other workers. D) It reduces the cost of producing goods and therefore lowers the value of labor's services.

Q: Between 1980 and 2011, income inequality in the United States has increased in part due to rapid technological change. How does technological change contribute to income inequality? A) Advancements in technology displace skilled and unskilled workers in certain fields, leading to higher unemployment rates. B) Technology complements the skills of the well-educated while rendering redundant the labor services of unskilled and low-skilled workers. This causes a decline in the wages of low and unskilled workers relative to other workers. C) The opportunity cost of investing in technology is investments in human capital. The resulting decrease in labor's marginal productivity has lead to lower wages. D) Technological change favors the owners of capital and since high income individuals tend to own capital, income inequality is further exacerbated.

Q: What is the poverty rate? A) the rate at which the number of people relative to the size of the population fall below the poverty line B) the percentage of the population earning an annual income below the poverty line, according to the federal government's definition C) the percentage of working adults whose annual income is sufficiently low as to be are exempt from paying income taxes D) the percentage of households who qualify for government assistance to meet the minimal requirement for adequate nutrition

Q: What is the United States government's formal definition of the poverty line? A) It is a level of annual income equal to total income in society divided by the population, adjusted for a family of four. B) It is a level of annual income equal to the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition. C) It is the annual income level below which a household is exempt from taxes. D) It is a level of annual income equal to three times the amount of money necessary to purchase the minimal quantity of food required for adequate nutrition.

Q: Article Summary In 2012, Colorado and Washington legalized marijuana for recreational use, and one of the major selling points in each state's pro-marijuana campaign was the possibility of generating millions of dollars in tax revenue from sales which could be used for funding general education. The Colorado legislature was weighing a proposal to tax marijuana at 30 percent, of which 15 percent would be a sales tax on consumers and 15 percent an excise tax on growers. Washington has set a tax rate of 44 percent on consumers and 25 percent each for growers and retailers. Since the legalization of marijuana is relatively new, projecting the economic impact of its sale is difficult, leading to many questions as to the quantities that will be produced and sold and what actual tax revenues will be generated. Source: Elizabeth Dwoskin, "Colorado and Washington Try to Figure Out How to Tax Marijuana," Bloomberg Businessweek, April 26, 2013. Refer to the Article Summary. Suppose the sale of marijuana is legalized in Florida, and the state decides to charge a tax of $50 per ounce on each sale, with the state claiming that retailers will bear the entire burden of this tax. Draw a graph illustrating the situation where retail outlets would bear the entire tax burden of $50 per ounce of marijuana. Explain what would need to be true about the demand for marijuana for retailers to bear the entire burden of this tax, and if this would likely occur if marijuana sales were legalized.

Q: Suppose the equilibrium price and quantity of a 12-pack of Dr. Pepper are $5.00 and 10,000 12-packs, respectively, and the government decides to impose a $1.00 tax on every 12-pack of carbonated soft drinks. Draw two supply and demand graphs, one showing the excess burden of the tax when supply is less elastic and the other showing the excess burden of the tax when supply is more elastic. Identify the excess burden of the tax on each graph. On which graph is the excess burden the greatest?

Q: Figure 18-3 Refer to Figure 18-3. The figure above shows a demand curve and two supply curves, one more elastic than the other. Use Figure 18-3 to answer the following questions. a. Suppose the government imposes an excise tax of $1.00 on every unit sold. Use the graph to illustrate the impact of this tax. b. If the government imposes an excise tax of $1.00 on every unit sold, will the consumer pay more of the tax if the supply curve is S1 or S2? Refer to the graphs in your answer. c. If an excise tax of $1.00 on every unit sold is imposed, will the revenue collected by the government be greater if the supply curve is S1 or S2? d. If the government imposes an excise tax of $1.00 on every unit sold, will the deadweight loss be greater if the supply curve is S1 or S2?

Q: If grocery stores were legally required to charge a 10-cent fee for disposable grocery bags, who would bear the largest burden of this fee?

Q: Explain why it is more difficult to determine the incidence of the corporate income tax than it is to determine the incidence of the tax on gasoline.

Q: What is meant by "tax incidence"?

Q: If the government is most interested in minimizing excess burden of an excise tax, should it impose the tax on goods that are elastic or on goods that are inelastic?

Q: Explain the effect of price elasticities of supply and demand on tax incidence.

Q: When the demand for a product is less elastic than the supply, consumers pay the majority of the tax on the product.

Q: The person or firm that pays a tax bears the burden of the tax.

Q: The actual division of a tax between buyers and sellers in a market is the excess burden of the tax.

Q: For a given supply curve, the deadweight loss from the imposition of a tax is smaller if demand is more elastic.

Q: If the government wants to minimize the welfare loss of a tax, it should tax goods with more inelastic demands or supplies.

Q: Article Summary In 2012, Colorado and Washington legalized marijuana for recreational use, and one of the major selling points in each state's pro-marijuana campaign was the possibility of generating millions of dollars in tax revenue from sales which could be used for funding general education. The Colorado legislature was weighing a proposal to tax marijuana at 30 percent, of which 15 percent would be a sales tax on consumers and 15 percent an excise tax on growers. Washington has set a tax rate of 44 percent on consumers and 25 percent each for growers and retailers. Since the legalization of marijuana is relatively new, projecting the economic impact of its sale is difficult, leading to many questions as to the quantities that will be produced and sold and what actual tax revenues will be generated. Source: Elizabeth Dwoskin, "Colorado and Washington Try to Figure Out How to Tax Marijuana," Bloomberg Businessweek, April 26, 2013. Refer to the Article Summary. Colorado is weighing a proposal to tax marijuana at 30 percent, of which 15 percent would be a sales tax on consumers and 15 percent would be an excise tax on growers. Suppose the actual burden of the tax falls 80 percent on consumers and 20 percent on producers. In this case, consumers will actually bear the tax burden of ________ percent of the selling price and producers will actually bear the tax burden of ________ percent of the selling price. A) 24; 6 B) 50; 50 C) 15; 15 D) 80; 20

Q: Article Summary In 2012, Colorado and Washington legalized marijuana for recreational use, and one of the major selling points in each state's pro-marijuana campaign was the possibility of generating millions of dollars in tax revenue from sales which could be used for funding general education. The Colorado legislature was weighing a proposal to tax marijuana at 30 percent, of which 15 percent would be a sales tax on consumers and 15 percent an excise tax on growers. Washington has set a tax rate of 44 percent on consumers and 25 percent each for growers and retailers. Since the legalization of marijuana is relatively new, projecting the economic impact of its sale is difficult, leading to many questions as to the quantities that will be produced and sold and what actual tax revenues will be generated. Source: Elizabeth Dwoskin, "Colorado and Washington Try to Figure Out How to Tax Marijuana," Bloomberg Businessweek, April 26, 2013. Refer to the Article Summary. Colorado is weighing a proposal to tax marijuana at 30 percent, of which 15 percent would be a sales tax on consumers and 15 percent would be an excise tax on growers. Does this necessarily mean that each group will bear half the burden of the tax? A) Yes, since the taxes are divided equally between consumers and producers, each will bear half the burden. B) Yes, despite the even split of the 30 percent tax, consumers and producers always bear equal burdens of a tax. C) No, the burden of a tax is always 100 percent on the consumer. D) No, the burden of the tax will depend on the elasticity of demand and supply.

Q: For a given supply curve, how does the elasticity of demand affect the burden of a tax imposed on a product? A) The excess burden of the tax will be minimized when the demand is unit-elastic. B) The excess burden of the tax will be greater when the elasticity of supply is greater than the elasticity of demand. C) The excess burden of the tax will be greater when the demand is less elastic than when it is more elastic. D) The excess burden of the tax will be greater when the demand is more elastic than when it is less elastic.

Q: "For a given supply curve, the excess burden of a tax will be greater when the demand for a product is less elastic than when the demand is more elastic." This statement is A) correct. B) incorrect because the incidence of the tax, not the burden of the tax, is affected by the elasticity of demand. C) incorrect. When demand is less elastic, the burden of the tax is smaller than when the demand is more elastic. D) incorrect. The statement confuses demand with quantity demanded.

Q: A study by the Congressional Budget Office (CBO) regarding the corporate income tax included the following statement: "A corporation may write its check to the Internal Revenue Service for payment of the corporate income tax, but the money must come from somewhere..." The comments that followed this statement argued that A) corporations pass on some of the burden of the tax to investors in the company, to workers, and to consumers. B) the corporate income tax is a reliable source of revenue because corporations cannot avoid paying the tax. C) it is necessary to retain the tax because it is based on the ability-to-pay principle. D) the tax is more progressive than the individual income tax.

Q: Most economists agree that some of the burden of the corporate income tax A) is reduced because the tax is progressive. B) is shared by the federal government. C) is reduced because the tax is used to attain a social objective. D) is passed on to consumers in the form of higher prices.

Q: Which of the following statements concerning the federal corporate income tax is true? A) It is an efficient tax because it imposes a small excess burden relative to the tax revenue it raises. B) The incidence of the corporate income tax can be determined by using demand and supply analysis. C) Determining the incidence of the corporate income tax is complicated because it is not certain how corporations respond to the tax. D) The corporate income tax is an example of the benefits-received principle.

Q: How would the elimination of a sales tax affect the market for a product that had been subject to the tax? A) The demand for the product would rise and the equilibrium price would fall by the amount of the tax. B) The equilibrium price for the product would fall by less than the amount of the tax. C) The reduction in government revenue from the tax would be made up by an increase in property taxes. D) The supply of the product would become more elastic.

Q: There is a difference between who is legally required to send a tax payment to the government and who bears the burden of the tax. Which of the following would have the most impact on who bears the burden of an excise tax? A) whether the tax is imposed by the federal government or a state government B) whether the tax is based on the ability-to-pay principle or the benefits-received principle C) The motive for the tax. If the tax is designed to raise revenue, more of the burden will fall on firms. If the tax is designed to achieve a social objective (for example, to discourage smoking) more of the burden will fall on consumers. D) The elasticity of demand for the item that is taxed.

Q: When the demand for a product is less elastic than the supply A) consumers pay the majority of the tax on the product. B) firms pay the majority of the tax on the product. C) firms pay the entire tax on the product. D) consumers pay the entire tax on the product.

Q: When the demand for a product is more elastic than the supply A) consumers pay the majority of the tax on the product. B) consumers pay the entire tax on the product. C) firms pay the majority of the tax on the product. D) firms pay the entire tax on the product.

Q: The term tax incidence refers to A) the degree of progression of a tax. B) the actual division of the burden of a tax between buyers and sellers in a market. C) the amount of revenue government collects from a tax imposed on a good or service. D) whether the burden of a tax rests more heavily on those with higher incomes or those with lower incomes.

Q: Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, A) the deadweight loss is identical under either supply curve. B) the deadweight loss is greater under the supply curve S1. C) the deadweight loss is greater under the supply curve S0. D) there is no deadweight loss since revenue raised is used to fund government projects.

Q: Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, what is the size of the deadweight loss, if there is any? A) the area adcif the supply curve is S0 and the area bec if the supply curve is S1. B) the area afcdif the supply curve is S0 and the area bfce if the supply curve is S1. C) the area becf under either supply curve. D) There is no deadweight loss; revenue raised is used to fund government projects.

Q: Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax A) is larger if the supply curve is S0. B) is larger if the supply curve is S1. C) is identical under either supply curve. D) is not maximized.

Q: Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax is represented by the area A) (PaPc Qa) if the supply curve is S0 and (PbPc Qb) if the supply curve is S1. B) (PaPd Qa) if the supply curve is S0 and (PbPe Qb) if the supply curve is S1. C) (PaPe Qa) under either supply curve. D) (PbPe Qb) under either supply curve.

Q: Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax A) is greater under the more elastic supply curve S0. B) is greater under the less elastic supply curve S0. C) is greater under the less elastic supply curve S1. D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior.

Q: Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the producer's burden of the tax A) is Pa- Pdunder either supply curve. B) is Pb- Peunder either supply curve. C) is Pa- Pdif the supply curve is S0 and Pb- Peif the supply curve is S1. D) is Pc- Pdif the supply curve is S0 and Pc- Peif the supply curve is S1.

Q: Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax A) is greater under the more elastic supply curve S0. B) is greater under the less elastic supply curve S0. C) is greater under the less elastic supply curve S1. D) is the same under either supply curve because there is a single demand curve that captures buyers' market behavior.

Q: Figure 18-2 Figure 18-2 shows a demand curve and two sets of supply curves, one set more elastic than the other. Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the consumer's burden of the tax A) is Pa- Pcunder either supply curve. B) is Pb- Pcunder either supply curve. C) is Pa- Pcif the supply curve is S0 and Pb- Pcif the supply curve is S1. D) is Pa- Pdif the supply curve is S0 and Pb- Peif the supply curve is S1.

Q: Consider the following methods of taxing a corporation's income: a. A flat tax, as opposed to a progressive tax, is levied on corporate profits. b. A system whereby a corporation calculates its annual profit and notifies each shareholder of her portion of the profits. The shareholder would then be required to include this amount as taxable income for her personal income tax. The corporation does not pay a tax. c. A system where the federal government continues to tax corporate income through the corporate income tax but allows individual taxpayers to receive, tax free, corporate dividends and capital gains. Which of the methods above would avoid double taxation? A) a, b, and c B) a and b only C) a and c only D) b and c only

Q: The corporate income tax is ultimately paid by all of the following except A) owners of the corporation. B) the corporation's debtors in the form of lower rates of return on the corporation's bonds. C) customers in the form of higher prices. D) employees in the form of lower wages.

Q: Economists argue that the corporate income tax is an example of a tax with a high deadweight loss because A) some of the burden of the tax is passed on to consumers in the form of higher prices. B) it discourages corporations from undertaking capital investments to enhance market competitiveness. C) taxing a corporation's income amounts to double taxing the earnings on individual shareholders' investments in corporations. D) it encourages corporations to seek ways to evade taxes.

Q: Figure 18-1 Refer to Figure 18-1. Area E+H represents A) the portion of sales tax revenue borne by consumers. B) the portion of sales tax revenue borne by producers. C) the excess burden of the sales tax. D) sales tax revenue collected by the government.

Q: Figure 18-1 Refer to Figure 18-1. Area F+G represents A) the portion of sales tax revenue borne by consumers. B) the portion of sales tax revenue borne by producers. C) the excess burden of the sales tax. D) sales tax revenue collected by the government.

Q: Figure 18-1 Refer to Figure 18-1. Area B+C represents A) the portion of sales tax revenue borne by consumers. B) the portion of sales tax revenue borne by producers. C) the excess burden of the sales tax. D) sales tax revenue collected by the government.

Q: Figure 18-1 Refer to Figure 18-1. Area B+C+F+G represents A) the portion of sales tax revenue borne by consumers. B) the portion of sales tax revenue borne by producers. C) the excess burden of the sales tax. D) sales tax revenue collected by the government.

Q: Figure 18-1 Refer to Figure 18-1. The excess burden of the tax is represented by the area A) B+C. B) F+G. C) E+H. D) B+C+F+G.

Q: Figure 18-1 Refer to Figure 18-1. Of the tax revenue collected by the government, the portion borne by producers is represented by the area A) B+C. B) F+G. C) E+H. D) B+C+F+G.

Q: Figure 18-1 Refer to Figure 18-1. Of the tax revenue collected by the government, the portion borne by consumers is represented by the area A) B+C. B) F+G. C) E+H. D) B+C+F+G.

Q: Figure 18-1 Refer to Figure 18-1. The sales tax revenue collected by the government is represented by the area A) B+C. B) F+G. C) E+H. D) B+C+F+G.

Q: Suppose the government imposes an 8 percent sales tax on clothing items and the tax is levied on sellers. Who pays for the tax in this situation? (Assume that the demand curve is downward-sloping and that the supply curve is upward-sloping.) A) The tax is borne entirely by the sellers. B) The sellers will pass on the entire sales tax to consumers and therefore the consumers bear the tax. C) The tax will be borne partly by consumers and partly by sellers. D) It is not possible to answer the question without information on price elasticities.

Q: The actual division of the burden of a tax is called A) tax credit. B) tax incidence. C) excess burden. D) tax dispersion.

Q: Last year, Anthony Millanti earned exactly $30,000 of taxable income. Assume that the income tax system used to determine Anthony's tax liability is progressive. The table below lists the tax brackets and the marginal tax rates that apply to each bracket.a. Draw a new table that lists the amounts of income tax that Anthony is obligated to pay for each tax bracket, and the total tax he owes the government. (Assume that there are no allowable tax deductions, tax credits, personal exemptions or any other deductions that Anthony can use to reduce his tax liability).b. Determine Anthony's average tax rate.Tax BracketMarginal Tax Rate$0-5,0000.05 (5%)5,001-10,0000.10 (10%)10,001-15,0000.15 (15%)15,001-20,0000.20 (20%)20,001-25,0000.25 (25%)25,001-30,0000.30 (30%)

Q: Suppose, on average, a family in Church Falls earning $60,000 per year paid 6 percent of its income in state taxes. A family earning $80,000 paid, on average, $4,760 in state income taxes. Are state taxes in Church Falls progressive or regressive? Be sure to explain the difference between a progressive tax and a regressive tax.

Q: Table 18-10Income Tax BracketTax Rateon the first $6,000 of taxable income10%on the next $14,000 of taxable income15%on the next $24,500 of taxable income25%on the next $30,500 of taxable income30%Table 18-10 shows the income tax brackets and tax rates for single taxpayers in Bauxhall.Refer to Table 18-10. A tax exemption is granted for the first $10,000 earned per year. Suppose you earn $75,000.a. What is the amount of taxes you will pay?b. What is your average tax rate?c. What is your marginal tax rate?

Q: If your income is $40,000 and you pay taxes of $4,650, what is your average tax rate? Show your work.

Q: If you pay $3,000 in taxes on an income of $28,000, and $4,450 in taxes on an income of $38,000, what is your marginal tax rate? Show your work.

Q: If your income is $92,000 and you pay taxes of $19,475, what is your average tax rate? Show your work.

Q: If you pay $14,000 in taxes on an income of $125,000, and $17,400 in taxes on an income of $144,000, what is your marginal tax rate? Show your work.

Q: The complexity of the U.S. federal income tax system results in significant annual deadweight losses. The opportunity cost of the hours taxpayers spend on record keeping and completing their tax returns amounts to billions of dollars. a. If the tax system was simplified, how would this benefit the economy? b. Why hasn't the tax system been simplified?

Q: Many state governments use lotteries to raise revenue. If a lottery is viewed as a tax, is it most likely a progressive tax or a regressive tax? What information would you need to determine whether the burden of a lottery is progressive or regressive?

Q: In 2012, which type of tax raised the most revenue for the U.S. federal government? Which type of tax raised the most revenue for state and local governments?

Q: Describe each of the principles governments consider when deciding which taxes to use.

Q: What is the difference between a marginal tax rate and an average tax rate? Which is more important in determining the impact of the tax system on economic behavior?

Q: A tax is efficient if it imposes a small excess burden relative to the tax revenue it raises.

Q: According to the benefits-received principle, those who receive the benefits from a government program should pay the taxes that support the program.

Q: Horizontal equity is achieved when taxes are collected from those who benefit from the government expenditure of the tax revenue.

Q: Exempting food purchases from sales tax is consistent with the ability-to-pay principle, although not necessarily consistent with vertical equity.

Q: The government of Silverado raises revenue to operate the city's hospital, open to all residents, through a general income tax paid by its residents. This method of raising revenue is consistent with the benefits-received principle.

Q: Horizontal equity means that two people in identical economic situations should pay the same amount of taxes.

Q: If the marginal tax rate is greater than the average tax rate, the tax structure is described as regressive.

Q: Suppose the government wants to finance housing for low-income families by placing a tax on the purchase of luxury homes. Assume the government defines a luxury home as a home that is purchased for at least $1 million. This tax is consistent with the A) benefits-received principle. B) social equity principle. C) ability-to-pay principle. D) horizontal-equity principle.

Q: Vertical-equity is most closely associated with which of the following goals or principles? A) the horizontal-equity principle B) the goal of economic efficiency C) the goal of attaining social objectives D) the ability-to-pay principle

Q: According to the benefits-received principle of taxation A) individuals who receive the benefits from a government program should pay the taxes that support the program. B) because high income individuals receive the most benefits from government programs, they should pay more taxes than lower income individuals. C) people in the same economic situation should bear an equal share of the tax burden. D) the benefits of government programs such as national defense are shared equally by all people; therefore, the burden of paying for these programs should be shared equally.

Q: The horizontal-equity principle of taxation is not easy to use in practice because A) some people engage in rent seeking to reduce their taxes below the level other people pay. B) people can use tax loopholes to reduce their incomes below the incomes of other taxpayers. C) different people receive different levels of government benefits even if their incomes are the same. D) it is difficult to determine whether people are in the same economic situation.

Q: According to the horizontal-equity principle of taxation A) individuals who receive the benefits of a good or service should bear a greater share of the tax burden. B) individuals who are most able to pay should bear a greater share of the tax burden. C) people in the same economic situation should be treated equally. D) individuals who are willing to bear a greater share of the tax burden should be compensated with non-monetary benefits.

Q: U.S. taxpayers spend many hours during the year maintaining records for tax purposes and preparing their income tax returns. This administrative cost A) is part of the deadweight loss of taxation. B) is equal to the value of consumer surplus associated with the income tax system. C) can be claimed as a deduction on income tax returns. D) is larger for individuals in the lowest income quintile than for individuals in the highest income quintile.

Q: According to the ability-to-pay principle of taxation A) individuals who receive the benefit of a good or service should bear a greater share of the tax burden. B) it is fair to expect a greater share of the tax burden to be borne by people who have a greater ability to pay. C) people in the same economic situation should bear an equal share of the tax burden. D) individuals who are willing to bear a greater share of the tax burden should be compensated with non-monetary benefits.

Q: The excess burden of a tax A) measures the efficiency loss to the economy that results from a tax, causing a reduction in the quantity of goods and services produced. B) is measured by the administrative costs required to implement a tax system. C) is a measure of the hardship imposed on low-income individuals in a society. D) is a measure of the foregone consumption as a result of having to pay taxes.

Q: A tax is efficient if A) individuals with the lowest incomes pay proportionately lower taxes than individuals with the highest incomes. B) it is based on profits earned and not on wages. C) it encourages saving and investment. D) it imposes a small excess burden relative to the revenue it raises.

Q: Table 18-9Income Tax BracketMarginal Tax Rate$0 - 6,00010%6,001 - 20,00015%20,001 - 44,50022%44,501 and over30%Table 18-9 shows the income tax brackets and tax rates for single taxpayers in Monrovia.Refer to Table 18-9. Sylvia is a single taxpayer with an income of $70,000. What is her marginal tax rate and what is her average tax rate?A) marginal tax rate = 30%; average tax rate = 30%B) marginal tax rate = 8%; average tax rate = 19.3%C) marginal tax rate = 30%; average tax rate = 22.5%D) marginal tax rate = 20%; average tax rate = 30%