Suppose the government proposes a negative income tax that calculates taxes owed according to the formula TAXES OWED = (1/3 * INCOME) - 10 000. A family that earns an income of $30 000 will:

Question

Quizplus · Accepted Answer

Using the given formula, we can calculate the taxes owed for a family with an income of $30,000.

TAXES OWED = (1/3 x $30,000) - $10,000 
TAXES OWED = $10,000 - $10,000 
TAXES OWED = $0

Therefore, the family with an income of $30,000 neither pays taxes nor receives an income subsidy.

Suppose the Government Proposes a Negative Income Tax That Calculates