Suppose there are two taxpayers, Leila and Frederick. Leila is a single mother of three who earned $60,000 annually in wage income and Frederick is a single father with one child and earned $150,000 annually in wage income. Also, suppose that earnings below $10,000 are taxed at a 10% marginal rate, earnings between $10,000 and $40,000 are taxed at a 12% marginal rate and earnings between $40,000 and $85,000 are taxed at a marginal rate of 22% and earnings between 85,000 and 160,000 are taxed at 24%. e. Continue to assume that there is no exemption and there is a standard deduction of $12,000. If college tuition costs both Leila and Frederick $5,000 per year and college tuition is treated as an adjustment. How much does Leila save in tax liability as a direct result of her tuition costs? How much does Frederick save in tax liability as a direct result of his college tuition costs? (5 points) f. Continue to assume that there is no exemption and there is a standard deduction of $12,000. If college tuition costs both Leila and Frederick $5,000 per year and college tuition is treated as a tax credit. How much does Leila save in tax liability as a direct result of her childcare costs? How much does Frederick save in tax liability as a direct result of his college tuition costs? (5 points) g. Who benefits more from using the college tuition as an adjustment? as a credit? Explain as if talking to a non-economist. How should we treat college tuition according to Haig- Simons? Explain in detail. (6 points) Suppose there are two taxpayers, Leila and Frederick. Leila is a single mother of three who earned $60,000 annually in wage income and Frederick is a single father with one child and earned $150,000 annually in wage income. Also, suppose that earnings below $10,000 are taxed at a 10% marginal rate, earnings between $10,000 and $40,000 are taxed at a 12% marginal rate and earnings between $40,000 and $85,000 are taxed at a marginal rate of 22% and earnings between 85,000 and 160,000 are taxed at 24%. e. Continue to assume that there is no exemption and there is a standard deduction of $12,000. If college tuition costs both Leila and Frederick $5,000 per year and college tuition is treated as an adjustment. How much does Leila save in tax liability as a direct result of her tuition costs? How much does Frederick save in tax liability as a direct result of his college tuition costs? (5 points) f. Continue to assume that there is no exemption and there is a standard deduction of $12,000. If college tuition costs both Leila and Frederick $5,000 per year and college tuition is treated as a tax credit. How much does Leila save in tax liability as a direct result of her childcare costs? How much does Frederick save in tax liability as a direct result of his college tuition costs? (5 points) g. Who benefits more from using the college tuition as an adjustment? as a credit? Explain as if talking to a non-economist. How should we treat college tuition according to Haig- Simons? Explain in detail. (6 points)
