Chapter 1

27. If they get married in 2010 and file jointly they will pay $38,643.50 [(10% x $16,750) + (15% x $51,250) + (25% x $69,300) + (28% x $42,700)]. If they wait until 2011 to get married and Conrad files as a single individual he will pay $44,516.75 [(10% x $8,375) + (15% x $25,625) + (25% x $48,400) + (28% x $89,450) + (33% x $8,150)]. It would be to their advantage to marry before the end of 2010 because they would save $5,873.25 in income taxes. If they each made $90,000 and both filed individually, they would pay in a combined total of $37,818.50 = 2 x $18,909.25 [(10% x $8,375) + (15% x $25,625) + (25% x $48,400) + (28% x $7,600)]. In this case, it would make more sense to wait until 2011 to get married and each file individually in 2010 because it will save them an additional $825. It would make no difference if they got married in 2010 and filed jointly or separately $38,643.50 = 2 x $19,321.75 [(10% x $8,375) + (15% x $25,625) + (25% x $34,650) + (28% x $21,350)].

28. John: $4,081.25 [(10% x $8,375) + (15% x $21,625)] William: $11,181.25 [(10% x 8,375) + (15% x $25,625) + (25% x $26,000)] William’s taxable income is twice that of John’s, but William’s taxes are 2.74 times that of John’s. This illustrates vertical equity as well as a progressive tax system where each tax bracket pays a different percentage of their income in taxes – the more money you earn, the higher your tax rate; and, just because you earn twice as much as someone else, it doesn’t mean you’ll take home twice as much as them.

30. $51,850 taxable income [$76,000 salary and wages – $13,200 itemized deductions – $10,950 personal and dependency exemptions ($3,650 x 3 persons)] $6,700 income tax liability [(10% x $16,750) + (15% x $35,100) – $240 tax credit]

35. June’s $400,000 of other taxable income puts her in the 35% tax bracket. John’s $100,000 of