1. The Millers, a family of four (with two young child) filing a joint tax return, have the following nformation to prepare their federal income t Total Income State and local income taxes Property tax Home mortgage interest Contribution to charities Interest on student loans Contribution to their 401(k) retirement account: S10,000 ax return: S130,000 S5,000 S6,000 S10,000 S2,000 S2,000 Please compute the following: (5 points) A) Adjusted gross income; B) Taxable income; C) Final tax liability; D) Marginal tax rate; and E) Average tax rate For 2018, standard deduction for a married couple was S24,000, and child tax credit was $2,000 per child. The tax brackets, which apply to the Millers, are: for taxable income from S0 to $20,000, the tax rate was 10%; from $20,000 to $60,000, the tax rate was 20%; from $60,000 to $100,000, the tax rate was 30%, and any income over $100,000 was taxed at 40%. 2. Suppose the progressive personal income tax in the previous question is replaced by a flat tax structured as followed: a) There is a standard deduction of S20,000 for a single taxpayer and $40,000 for a couple filing jointly. No itemized deduction is allowed, and no tax credits are allowed. No further exemptions, deductions, exclusions and adjustments are allowed. b) All taxable income is taxed at 20%. Please answer the following questions: (4 points) A) Under this flat tax, how much will the Millers family in the previous example pay in tax? (1) B) Is a flat tax designed this way still a progressive tax? (1) C) Which tax system is better? The progressive tax or the flat tax? Please use the two principles of efficiency and equity to answer this question. (2 points)