Homework 7

Homework 7 - Economics 1480 Homework #7 Question 1:...

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Economics 1480 Homework #7 Question 1: Marriage penalties This question relates to the marriage penalty. Suppose that the brackets for single and married filers are as given below: Marginal tax rate Single bracket Joint bracket 10% $0-$6,000 $0-$12,000 15% $6,0000-$27,950 $12,0000-$46,700 27% $27,950-$67,700 $46,700-$112,850 30% $67,700-$141,250 $112,850-$171,950 35% $141,250-$307,050 $171,950-$307,050 38.6% >$307,050 >$307,050 Note: This table provides marginal tax rates, not average tax rates. Thus, for an single individual with taxable income of $11,000, the first $6,000 is taxed at 10 percent and the remaining $5,000 is taxed at 15 percent, and the total tax is $600+$750=$1350. The marginal tax rate of 15 percent should NOT be applied to the entire $11,000. Alan, who has adjusted gross income of $25,000, is planning to marry Beth, who also has adjusted gross income of $25,000. Cathy, with adjusted gross income of $50,000, is planning to marry David, who is a graduate student and has no income. a) Compute the marriage penalty/bonus for each of these couples (for the purposes of this calculation, you can abstract from standard deductions and other features of tax code that depend upon filing status). b)
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This note was uploaded on 07/22/2010 for the course ECON 1480 taught by Professor Knight during the Spring '10 term at Brown.

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Homework 7 - Economics 1480 Homework #7 Question 1:...

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