In the negative income tax plan, a guarantee of $5,000 and a tax rate of 50 percent imply a break-even income of which of the following figures?

Question

Quizplus · Accepted Answer

The break-even income is the income level at which an individual pays taxes equal to the guaranteed income, thus receiving no net benefit from the negative income tax. With a guarantee of $5,000 and a tax rate of 50%, the break-even income is calculated as $5,000 / 0.5 = $10,000.

In the Negative Income Tax Plan, a Guarantee of $5,000