Scenario 20-8
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income) - $14,000

-Refer to Scenario 20-8. A family earning $40,000 before taxes will owe tax.

Question

Scenario 20-8
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/4 of income) - $14,000
​
​
-Refer to Scenario 20-8. A family earning $40,000 before taxes will owe tax.​

Quizplus · Accepted Answer

A family earning $40,000 would have a tax liability of (1/4 * $40,000) - $14,000 = $10,000 - $14,000 = -$4,000, meaning they would receive a subsidy instead of owing taxes.

Scenario 20-8 Suppose the Government Implemented a Negative Income Tax and Used