Final answer:
Christina's taxable income places her in the 15% marginal tax bracket, while Charles' extends into the 25% margin. Chris' income would be subject to a higher bracket, which may reach up to 37%. Each will have a different tax amount on their respective long-term capital gains due to their distinct tax brackets.
Step-by-step explanation:
Understanding the marginal tax rate helps in determining the amount of tax paid on different portions of income. In the scenario provided, Christina, with a taxable income of $35,000, falls into the 15% marginal tax bracket as her income is between $9,075 and $36,900. For Charles, with a $50,000 taxable income, his initial income up to $36,900 would be taxed at lower rates, and only the amount above $36,900 would be subjected to the 25% marginal tax rate. As for Chris with a taxable income of $500,000, only his income above the $36,900 threshold would be taxed at the higher bracket rate, which, following the Tax Cuts and Jobs Act of 2017, could be up to 37% for the highest earners
Regarding the long-term capital gain of $1,000 each earned in 2018, the tax rate on this gain would depend on their respective tax brackets. Typically, long-term capital gains have preferential tax rates which are usually lower than the ordinary income tax rates. Given this, the amount of tax paid on long-term capital gains for Christina, Charles, and Chris would be less compared to their income tax, assuming no other adjustments or factors alter their tax situation. Note that capital gain tax rates were also affected by the Tax Cuts and Jobs Act of 2017.