Scenario 20-7
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/6 of income) - $24,000
-Refer to Scenario 20-7. A family earning $60,000 before taxes would pay how much in taxes?

Question

Quizplus · Accepted Answer

Substitute $60,000 into the formula: 
Taxes owed = (1/6)($60,000) - $24,000
Taxes owed = $10,000 - $24,000
Taxes owed = -$14,000
The negative sign means that the family would receive a refund of $14,000.

Scenario 20-7 Suppose the Government Implemented a Negative Income Tax and Used