Jorge and Anita, married taxpayers, earn $141,500 in taxable income and $48,000 in interest from an investment in City of Heflin bonds. (Use the U.S. tax rate schedule for married filing jointly).

Required:

1. If Jorge and Anita earn an additional $104,000 of taxable income, what is their marginal tax rate on this income?
2. What is their marginal rate if, instead, they report an additional $104,000 in deductions?

Schedule Y-1-Married Filing Jointly or Qualifying Widow(er) If taxable income is over:But not over: The tax is: $ 0 $ 19,750 10% of taxable income $ 19,750 $ 80,250 $1,975 plus 12% of the excess over $19.750 $ 80,250 $171,050 59.235 plus 22% of the excess over $80,250 $171,050 $326,600 S29,211 plus 24% of the excess over $171,050 $326,600 $414,700 566,543 plus 32% of the excess over $326,600 $414,700 $622,050 $94.735 plus 35% of the excess over $414,700 $622,050 $167.307.50 plus 37% of the excess over $622.050