Question

In 2009, the effective income tax rate paid by the top 1% of households in the U.S. was 20.4%, while the bottom two quintiles actually paid _______ effective income taxes.

Select the correct answer below:

even higher

negative

the same

zero

Answer 1

The answer is B

In 2009, the effective income tax rate paid by the top 1% of households in the U.S. was 20.4%, while the bottom two quintiles actually paid negative effective income tax because of the provisions like income tax credit.

Income tax credit-  Earned income tax credit(EITC) or earned income credit ( EIC) is a refundable tax credit for low- to-moderate-income working individuals and couples, particularly those who have children. The amount of EITC benefit depends on the income of recipient and the number of childrens they have.