Now, suppose we allow a tax deduction for all giving to charity, and a $500 refundable tax credit for buying a new home.
a. Calculate the total taxes owed by someone with $50,000 of income who gives $5,000 to charity and buys a new home.
b. Calculate the total taxes owed by someone with $20,000 of income who gives $100 to charity and does not buy a new home.