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Consider a couple filing jointly, whose taxable income last year was $130,000. Assume that state taxes on their taxable earnings were 5%. The couple pays

Consider a couple filing jointly, whose taxable income last year was $130,000. Assume that state taxes on their taxable earnings were 5%. The couple pays social security at the rate of 6.2%, and Medicare taxes at the rate of 1.45%. Half of the couples' social security and Medicare taxes are paid by their employer. Also recognize that social security was only charged on the first $112,000. Find the couples' tax liability, its average tax rate and its marginal tax rate. What is higher, the couple's average tax rate, or their marginal tax rate? Explain your answer.

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