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. This negative income tax would guarantee what minimum level of income to every family?

Question

Quizplus · Accepted Answer

For a family to have a guaranteed minimum level of income, the tax owed would be zero (Taxes owed = 0). Using the formula (1/4 of income) - $16,000 = 0, solving for income gives a guaranteed minimum income of $16,000.

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