Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3 Income)- 10,000.If a family doesn't earn any income,how does the negative income tax affect it?

Question

Assume that the government proposes a negative income tax that calculates the taxes owed as follows: Taxes Owed = (1/3   Income)- 10,000.If a family doesn't earn any income,how does the negative income tax affect it?

Quizplus · Accepted Answer

Since the family doesn't earn any income, the negative income tax formula calculates their taxes owed as (1/3 x 0) - 10,000 = -$10,000. This negative amount means that the family will receive an income subsidy of $10,000.

Assume That the Government Proposes a Negative Income Tax That