Suppose a poverty program has a basic benefit of $14,000,zero deductions,and a marginal tax rate of 0.70.The breakeven level of income is

Question

Quizplus · Accepted Answer

The breakeven level of income is the point at which the benefit phases out completely. With a marginal tax rate of 0.70, for every dollar earned, the benefit is reduced by 70 cents. To completely phase out a $14,000 benefit, the earned income would be $14,000 / 0.70 = $20,000.

Suppose a Poverty Program Has a Basic Benefit of $14,000,zero