Suppose Texas establishes an income tax schedule that has a tax rate of 5% on the first $20,000 of income, 10% on the next $10,000, and then 20% on all taxable income above $30,000. Texas provides a $2,000 exemption (deduction) per family member. (Let's call this tax system A.)

1. The Lorac family has three members. Milton is the sole earner, and he has two kids. The family's annual income is $35,000. Calculate their:

A. Taxable income

B. Effective marginal tax rate

C. Total taxes

D. Effective average tax rate.