Suppose a negative income tax system is established and the formula to compute a person's annual tax liability is:
tax due = (25% of income) - €15,000.
If a person earns no income then he would receive a negative income tax payment of

Question

Suppose a negative income tax system is established and the formula to compute a person's annual tax liability is: 
      tax due = (25% of income) - €15,000.
If a person earns no income then he would receive a negative income tax payment of

Quizplus · Accepted Answer

If a person earns no income, then their tax due would be -€15,000 (since 25% of zero is zero, and subtracting €15,000 from zero results in a negative number). Therefore, they would receive a negative income tax payment of €15,000.

Suppose a Negative Income Tax System Is Established and the Formula