Single Taxpayers Married Taxpayers Filing Joint Returns Tax Rate (%) 0-$9,275 0-$18,550 10.0 $9,276-$37,650 $18,551-$75,300 15.0...

Single Taxpayers	Married Taxpayers Filing Joint Returns	Tax Rate (%)
0-$9,275	0-$18,550	10.0
$9,276-$37,650	$18,551-$75,300	15.0
$37,651-$91,150	$75,301-$151,900	25.0
$91,151-$190,150	$151,901-$231,450	28.0
$190,151-$413,350	$231,451-$413,350	33.0
$413,351-$415,050	$413,351-$466,950	35.0
$415,051 and above	$466,951 and above	39.6

Based on this table, answering the following questions:

(Please show your intermediate processes, instead of just a final number for your answers. Only round your final answers to two decimal places.)

(a1) Suppose there is a person called Alpha who has an annual income of $300,000 and Alpha’s spouse has an annual income of $20,000. What dollar amount of tax do Alpha and Alpha’s spouse each need to pay respectively, if they choose to file their taxes separately? What dollar amount of tax do they need to pay if they choose to file their taxes jointly?

(a2) What are the average tax rates for Alpha and Alpha’s spouse respectively, if they choose to file separately? What is the average tax rate if they choose to file jointly?

(b1) Suppose there is another person called Beta who has an annual income of $160,000 and Beta’s spouse also has an annual income of $160,000. What dollar amount of tax do Beta and Beta’s spouse each need to pay respectively, if they choose to file their taxes separately? What dollar amount of tax do they need to pay if they choose to file their taxes jointly?

(b2) What are the average tax rates for Beta and Beta’s spouse respectively, if they choose to file separately? What is the average tax rate if they choose to file jointly?

(c) Based on what you obtained from (a1) to (b2), what are the conclusions you could infer regarding the ways of filing taxes? (What are the advantages and disadvantages of these two ways?)

Expert Solution

		Filling Separately			Filling Jointly
Income Slab	Tax Rate	Alpha	Spouse	Total	Income Slab	Tax Rate	Alpha	Spouse	Total
Annual Income (A)	$ 300,000	$ 20,000	$ 320,000	Annual Income (A)	$ 300,000	$ 20,000	$ 320,000
0-$9,275	10%	$ 928	$ 928	$ 1,855	0-$18,550	10%			$ 1,855
$9,276-$37,650	15%	$ 4,256	$ 1,609	$ 5,865	$18,551-$75,300	15%			$ 8,512
$37,651-$91,150	25%	$ 13,375	$ -	$ 13,375	$75,301-$151,900	25%			$ 19,150
$91,151-$190,150	28%	$ 27,720	$ -	$ 27,720	$151,901-$231,450	28%			$ 22,274
$190,151-$413,350	33%	$ 36,250	$ -	$ 36,250	$231,451-$413,350	33%			$ 29,221
$413,351-$415,050	35%	$ -	$ -	$ -	$413,351-$466,950	35%			$ -
$415,051 and above	40%	$ -	$ -	$ -	$466,951 and above	40%			$ -
a1 Total Tax (B)	$ 82,528	$ 2,536	$ 85,064	Total Tax (B)			$ 81,012
a2 Average Tax Rate (B / A)X100	28%	13%	27%	Average Tax Rate (B / A)X100			25%

		Filling Separately			Filling Jointly
Income Slab	Tax Rate	Beta	Spouse	Total	Income Slab	Tax Rate	Alpha	Spouse	Total
Annual Income (A)	$ 160,000	$ 160,000	$ 320,000	Annual Income (A)	$ 160,000	$ 160,000	$ 320,000
0-$9,275	10%	$ 928	$ 928	$ 1,855	0-$18,550	10%			$ 1,855
$9,276-$37,650	15%	$ 4,256	$ 4,256	$ 8,512	$18,551-$75,300	15%			$ 8,512
$37,651-$91,150	25%	$ 13,375	$ 13,375	$ 26,750	$75,301-$151,900	25%			$ 19,150
$91,151-$190,150	28%	$ 19,278	$ 19,278	$ 38,555	$151,901-$231,450	28%			$ 22,274
$190,151-$413,350	33%	$ -	$ -	$ -	$231,451-$413,350	33%			$ 29,221
$413,351-$415,050	35%	$ -	$ -	$ -	$413,351-$466,950	35%			$ -
$415,051 and above	40%	$ -	$ -	$ -	$466,951 and above	40%			$ -
b1 Total Tax (B)	$ 37,836	$ 37,836	$ 75,672	Total Tax (B)			$ 81,012
b2 Average Tax Rate (B / A)X100	24%	24%	24%	Average Tax Rate (B / A)X100			25%

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