what is the meaning of marginal tax?

Marginal Tax
A marginal tax rate is the tax rate that applies to the last dollar of the tax base (taxable income or spending),[1] and often applied to the change in one's tax obligation as income rises:

To calculate the marginal tax rate on an income tax:

Let m be the marginal tax rate.

Let t be the tax liability.

Let i be the taxable income.




圖片參考：http://upload.wikimedia.org/math/5/9/8/5989996fad1b9fa87c4a6a84221463dc.png

For an individual, it can be determined by increasing or decreasing the income earned or spent and calculating the change in taxes payable. An individual's tax bracket is the range of income for which a given marginal tax rate applies. The marginal tax rate may increase or decrease as income or consumption increases, although in most countries the tax rate is (in principle) progressive. In such cases, the average tax rate will be lower than the marginal tax rate: an individual may have a marginal tax rate of 45%, but pay average tax of half this amount. In a jurisdiction with a flat tax, everyone pays the same marginal tax rate. Some fixed amount of earnings (e.g., the first ten thousand dollars) is typically exempt from the flat tax, which means that not everyone pays the same average tax rate.
In economics, marginal tax rates are important because they determine incentives to increase income; at high marginal tax rates, the individual has less incentive to earn more. In theory, if a 100% marginal tax rate existed, the individual would no longer have any incentive to increase earnings, potentially even reducing total tax revenue (see Laffer curve). Public discussion of "high taxes" may refer to overall tax rates or marginal taxes.