Using the same assumption as above about a negative income tax system complete this sentence:
A person who is earning an annual salary of €20,000 will receive __________ of income from work and __________ of income from the government.

Question

Using the same assumption as above about a negative income tax system complete this sentence: ​
A person who is earning an annual salary of €20,000 will receive __________ of income from work and __________ of income from the government.

Quizplus · Accepted Answer

With a negative income tax system, the government provides a certain amount of income to individuals earning below a certain threshold, but as the individual earns more from work, the amount of government-provided income decreases. Assuming a negative income tax rate of 50% and a threshold of €10,000, the individual earning €20,000 would receive €10,000 from the government and €10,000 from work, for a total income of €20,000.

Using the Same Assumption as Above About a Negative Income