[20 marks] Consider a flat tax system where the first $ > 0 of income is not taxable and any

income in excess of $ is taxed at a fixed marginal rate of > 0. Jane and James are married

with incomes and , where > > 0.

Suppose = .

(a) What is total tax liability of Jane and James if they tax jointly on their total income, + ?

(b) What is total tax liability of Jane and James if they tax separately on their income, and

What is total tax liability of Jane and James if they tax jointly on their total income, , and this

bigger or smaller than the tax liability in (a)