Ed and Wendy are a married couple with no children. Each earns $75,000 per year, and their combined household adjusted gross income is $150,000. John and Kristen also have $150,000 in combined household adjusted gross income and no children. However, John earns all of the income; Kristen does not work. The standard deduction for married couples filing jointly is $24,800, and $12,400 for a single taxpayer. For married filing jointly, Taxable Income OverRates$010$19,75012$80,25022For Unmarried Individuals, Taxable Income OverRates$010$9,87512$40,12522 Use the 2020 tax rates for married couples filing jointly to compute how much income tax each couple owes. Assume that both take the standard deduction. [5] b. Does either couple pay a “marriage tax?” Does either couple receive a “marriage benefit?”

In the solution above, we calculated the federal income tax for two couples, Ed and Wendy, and John…

Answered: Ed and Wendy are a married couple with…

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter15: Income Inequality And Poverty

Section: Chapter Questions

Problem 7CQ

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Question

Ed and Wendy are a married couple with no children. Each earns $75,000 per year, and their combined household adjusted gross income is $150,000. John and Kristen also have $150,000 in combined household adjusted gross income and no children. However, John earns all of the income; Kristen does not work.

The standard deduction for married couples filing jointly is $24,800, and $12,400 for a single taxpayer.

For married filing jointly, Taxable Income Over	Rates
$0	10
$19,750	12
$80,250	22

For Unmarried Individuals, Taxable Income Over	Rates
$0	10
$9,875	12
$40,125	22

Use the 2020 tax rates for married couples filing jointly to compute how much income tax each couple owes. Assume that both take the standard deduction. [5]

b. Does either couple pay a “marriage tax?” Does either couple receive a “marriage benefit?”

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