Assume that DeShawn is a single parent who is in poverty. He receives food stamps and Medicaid. For every $100 that he earns, DeShawn loses $35 of his food stamp benefits and $20 in his Medicaid benefits. Also, DeShawn's income is taxed at a rate of 10 percent. Then, Peter's effective marginal tax rate is

Question

Quizplus · Accepted Answer

DeShawn loses $35 in food stamps and $20 in Medicaid for every $100 earned, totaling $55. Additionally, his income is taxed at 10%, adding up to a total effective marginal tax rate of 65%.

Assume That DeShawn Is a Single Parent Who Is in Poverty