There Is a 50% Income Tax in a Society with Only

Multiple Choice

There is a 50% income tax in a society with only two individuals.Both individuals have pre-tax incomes of $50,000.In period 1,there is no tax deduction,and Harry gives $5,000 to charity while Sally gives $8,000 to charity.In period 2,the government makes charitable donations tax deductible and Harry gives $6,000 and Sally gives $12,000.The marginal impact of the tax break was ________; the inframarginal impact of the tax break was _________.

A) $2,500; $13,000
B) $2,500; $6,500
C) $5,000; $13,000
D) $5,000; $6,500