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. Below what level of income would families start to receive a subsidy from this negative income tax?

Question

Quizplus · Accepted Answer

Families would start to receive a subsidy when their taxes owed become negative. Setting the formula (1/6 of income) - $24,000 < 0, we solve for income: (1/6 of income) < $24,000, which gives income < $144,000.

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