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 couples average tax rate, or their marginal tax rate? Explain your answer.

Income	Tax Rate
$0 - 40,000	15%
40,001 - 100,000	28%
100,000 - 150,000	31%
150,001 +	35%