Please answer at least up to f with full calculations and clear answers. #$1.(25$ marks$)$ Consider a Canadian family of six $-$ two adults and four children $($all under

$.$ Currently the husband's employment income is $$53,000$ and the wife's income is

$$10,000.$ Assume that only the federal taxes are paid $($that is$,$ ignore the provincial taxes$)$ and

use $2023$ brackets and rates $($Handout$($CH$17)\_$ProvincialTaxRates$2023.$pdf$).$

$($a$)$ If the husband's income increases by $$13,000,$ by how much does his PIT

increase?

$($b$)$ If we consider the same income increase as in $($a$),$ but now look at the payroll taxes

CPP and EI$.$ Given that employee's share of CPP is $5\mathrm{.}95\%$ and employee's share of

EI is $1\mathrm{.}63\%,$ by how much does his payroll tax liability increase? The individual

income limit for CPP is $$66,600$ and a similar limit for $EI$ is $$61,500.$ Also calculate

the changes in the CPP and EI tax credits due to this payroll tax liability increase.

$($c$)$ If the husband's income increases by $$13,000,$ by how much does his tax liability

increase due to the GST credit clawback? The GST credit is clawed back by $5\%$ of

the amount by which the family income exceeds $$42,335$ but under $$69,015.$

$($d$)$ Now consider the Canada Child Benefit $($CCB$).$ It is clawed back by $23\%$ if the

family income is between $$34,863$ and $$75,537$ and by $9\mathrm{.}5\%$ if the family income

exceeds $$75,537.$ By how much does the husband's tax liability increase due to the

CCB clawback when his income increases by $$13,000?$

$($e$)$ Combining $($a$),($b$),($c$)$ and $($d$),$ what is his effective MTR$?$

$($f$)$ If all four kids are between $6$ and $17$ and the maximum CCB per child of this age is

$$6,275$ per year, at what family income is this benefit fully clawed back?

$($g$)$ How would your answers to $($a$)-($e$)$ differ if the husband's initial income were

$$153,000($instead of $$53,000)?$ For your PIT increase calculation also consider the

reduction in the BPA of $$13,521+$$$1,479($since its portion of $$1,479$ is reduced as

soon as the person' income reaches the fourth PIT bracket and becomes zero in the

fifth PIT bracket$)$ and the corresponding reduction in the basic personal TC$.$

$($h$)$ Why do the items used for the effective MTR calculations in our examples can be

viewed as part of the income tax system? Briefly explain.

$($i$)$ Compare the husband's effective MTRs from $($e$)$ and $($g$)$ and explain how you can

reconcile these results with the progressivity of the federal PIT system in Canada.

$($j$)$ By how much does the reduction in the BPA portion of $$1,479$ in the fourth PIT

bracket of $29\%$ increases the marginal rate of this bracket? Calculate the new rate.