Which one of the following statements related to taxes is correct? 1. The margin

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.

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