Scenario 20-3
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) − $16,000
-Refer to Scenario 20-3. A family earning $46,000 before taxes would have how much after-tax income?

Question

Quizplus · Accepted Answer

The tax liability is calculated as (1/4 of $46,000) - $16,000 = $11,500 - $16,000 = -$4,500. Since the tax liability is negative, the family receives $4,500, making their after-tax income $46,000 + $4,500 = $50,500.

Scenario 20-3 Suppose the Government Implemented a Negative Income Tax and Used