1. The U.S. Income Tax System Suppose there are two taxpayers, Leila and Frederick. Leila is a single mother ofthree who earned $60,000 annually in wage income and Frederick is a single father with one child and earned $150,000 annually in wage income. Also, suppose that earnings below $10,000 are taxed at a 10% marginal rate, earnings between $ 10,000 and $40,000 are taxed at a 12% marginal rate and earnings between $40,000 and $85,000 are taxed at a marginal rate of 22% and earnings between 85,000 and 160,000 are taxed at 24%. a. Assuming that there is a personal exemption of $4,000 and a standard deduction of $6,000for a single filer, and a tax credit of $1,000 per child what is the tax liabilityof Leila? What is the tax liabilityof Frederick? Show your work. {6 points] b. Assume now that the personal exemption was eliminated, the standard deduction increased to $12,000 and there was a tax credit of $2,000 per child. What is the tax liability of Leila? What is the tax liabilityof Frederick? {5 points] u 0 c. Is the increase ofthe child tax credit between a and "b\" making the income tax system more or less "fair"? Explain in detail using the information that you have learned in the course to define fair. {4 points] n 0 d. Do you believe the increase in the standard deduction from a to \"b" is making the tax system more progressive or regressive? Explain the definitions in your answer. (4 points) e. Continue to assume that there is no exemption and there is a standard deduction of $12,000. If college tuition costs both Leila and Frederick $5,000 per year and college tuition is treated as an adjustment. How much does Leila save in tax liability as a direct result of her tuition costs? How much does Frederick save in tax liability as a direct result of his college tuition costs? (5 points) f. Continue to assume that there is no exemption and there is a standard deduction of $12,000. If college tuition costs both Leila and Frederick $5,000 per year and college tuition is treated as a tax credit. How much does Leila save in tax liability as a direct result of her childcare costs? How much does Frederick save in tax liability as a direct result of his college tuition costs? {5 points] g. Who benefits more from using the college tuition as an adjustment? as a credit? Explain as if talking to a non-economist. How should we treat college tuition according to Haig- Simons? Explain in detail. [6 points)