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. This negative income tax ensures that families earn at least $56,000.

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
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-Refer to Scenario 20-8. This negative income tax ensures that families earn at least $56,000​.

Quizplus · Accepted Answer

The negative income tax ensures that families with no income receive $14,000, but it does not guarantee that all families earn at least $56,000. Families with an income of $56,000 would owe no taxes, but families with lower incomes would receive a subsidy, not necessarily reaching $56,000 in total income.

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