7- Consider lowering the tax rate of middle-income bracket from 23% to 20.5% and increasing the top federal tax rate on incomes >$200,000 from 29% to 33%. (20 points) a. Using the following information and applying the same elasticity of taxable income that Milligan and Smart used in the study of provincial tax increase (e=0.664), do you think this taxation policy is revenue neutral? Show your work. Top federal tax bracket=$200,000 Average income of earners in the top bracket=$480,000 number of filers in the top bracket=310,000 Federal loss from middle bracket tax cut=$3 Billion b. What are the problems of using e=0.664 in this case? 7- Consider lowering the tax rate of middle-income bracket from 23% to 20.5% and increasing the top federal tax rate on incomes >$200,000 from 29% to 33%. (20 points) a. Using the following information and applying the same elasticity of taxable income that Milligan and Smart used in the study of provincial tax increase (e=0.664), do you think this taxation policy is revenue neutral? Show your work. Top federal tax bracket=$200,000 Average income of earners in the top bracket=$480,000 number of filers in the top bracket=310,000 Federal loss from middle bracket tax cut=$3 Billion b. What are the problems of using e=0.664 in this case