Suppose a poverty program provides a basic benefit of $6,000,zero deductions,and a marginal tax rate of 0.6.The breakeven level of income is

Question

Quizplus · Accepted Answer

To find the breakeven level of income, we need to set the total benefit equal to the total tax paid:
$6,000 = 0.6(x - 0)
where x is the total income. 
Solving for x, we get:
x = $10,000
Therefore, the breakeven level of income is $10,000. Any income below $10,000 would receive the full $6,000 benefit without any tax. Any income above $10,000 would have a 60% marginal tax rate applied to the excess income.

Suppose a Poverty Program Provides a Basic Benefit of $6,000,zero