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Economics glossary · The macroeconomy

Marginal propensity to tax

What marginal propensity to tax means in economics, as one of the three marginal propensities to withdraw, with an example and a question to test yourself.

Definition
Marginal propensity to tax
The marginal propensity to tax, or MPT, is the share of each extra pound of income that is paid in tax.
Example

Can you think of an example of marginal propensity to tax?

Test yourself

Can you name the three marginal propensities to withdraw?

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