Suppose the government proposes a negative income tax that calculates taxes owed according to the formula TAXES OWED = (1/4* INCOME) - 15 000.Suppose a family only earns $20 000.How much tax would they pay?

Question

Quizplus · Accepted Answer

Using the formula provided, we can calculate the taxes owed for a family with an income of $20,000:

TAXES OWED = (1/4 x 20,000) - 15,000
TAXES OWED = 5,000 - 15,000
TAXES OWED = -10,000

Since the taxes owed are negative, this means that the family would receive a net income subsidy of $10,000, as option D suggests.

Suppose the Government Proposes a Negative Income Tax That Calculates