Assume that there is a very simple progressive income tax in the country. The marginal tax rate is 10% for income over $5000 to $10,000. It is 20% for income over $10,000 to $25,000, and it is 30% for income over $25,000.
a) How much tax will Jerry pay if his income is $7000? How much will Bob pay, who has an income of $18,000? How much will Greg pay with an income of $40,000?
b) How would your answer in part a) change if there is a $3000 standard deduction?
c) How would your answer in part a) change if there is a $1000 refundable tax credit?