Suppose the current welfare system is completely eliminated and replaced with a negative income tax.The tax credit granted to everyone is $10,000 and the tax on earnings is 25%.
-Refer to the above information.If an individual earned $62,000,his net tax payment would be

Question

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The individual would receive a tax credit of $10,000 and would pay taxes of $15,500 (25% of $62,000). The net tax payment would be $15,500 - $10,000 = $5,500.

Suppose the Current Welfare System Is Completely Eliminated and Replaced