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3. Individual Income Tax (40 points] During the 2017 tax year, the personal exemption was $4,050 and the standard deduction for married taxpayers filing jointly was $12,700. The tax bracket table for that year appears to the right. Table 2. Married Filing Joint Taxable Income Tax Brackets and Rates, 2017 Rate Taxable income Bracket Tax Owed 10% $0 to $18,650 10% of taxable income 15% $18,650 to $75,900 $1,865 plus 15% of the excess over $18,650 25% $75,900 to $153,100 $10,452.50 plus 25% of the excess over $75,900 28% $153,100 to $233,350 $29,752.50 plus 28% of the excess over $153,100 33% $233, 350 to $416,700 $52,222.50 plus 33% of the excess over $233,350 35% $416,700 to $470.700 $112,728 plus 35% of the excess over $416,700 39.60% $470,700+ $131,628 plus 39.6% of the excess over $470,700 Assume a married couple filing jointly has a taxable income of $154,000. 3e) Imagine you learn that this couple did their own tax calculations and believes their tax liability is $43,120. They complain to you and others nearby that 28% of their income goes toward taxes. What is going on here? How would you reply? 3. Individual Income Tax (40 points] During the 2017 tax year, the personal exemption was $4,050 and the standard deduction for married taxpayers filing jointly was $12,700. The tax bracket table for that year appears to the right. Table 2. Married Filing Joint Taxable Income Tax Brackets and Rates, 2017 Rate Taxable income Bracket Tax Owed 10% $0 to $18,650 10% of taxable income 15% $18,650 to $75,900 $1,865 plus 15% of the excess over $18,650 25% $75,900 to $153,100 $10,452.50 plus 25% of the excess over $75,900 28% $153,100 to $233,350 $29,752.50 plus 28% of the excess over $153,100 33% $233, 350 to $416,700 $52,222.50 plus 33% of the excess over $233,350 35% $416,700 to $470.700 $112,728 plus 35% of the excess over $416,700 39.60% $470,700+ $131,628 plus 39.6% of the excess over $470,700 Assume a married couple filing jointly has a taxable income of $154,000. 3e) Imagine you learn that this couple did their own tax calculations and believes their tax liability is $43,120. They complain to you and others nearby that 28% of their income goes toward taxes. What is going on here? How would you reply

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