Consider John, a 68-year-old individual facing a 39.6 percent marginal tax rate, with no wage income. Assume that if he earns a dollar, he loses 50 cents in Social Security benefits, and that 85 percent of his Social Security benefits are included in his taxable income.
a. Calculate his total marginal tax rate.
b. If he lives in California and faces an 11 percent state income tax, what is his marginal tax rate?

c. Assume he is self-employed, and must pay an additional 15 percent self-employment tax (a Social Security tax), but that his Social Security payments do not increase at all. Half the tax is deductible from his income for purposes of his income tax. What is his marginal tax rate now ?