Suppose a negative income tax system is established and the formula to compute a person's annual tax liability is: tax due = (25% of income) - R150 000.
If a person earns no income then he would receive a negative income tax payment of

Question

Quizplus · Accepted Answer

If a person earns no income, then their income would be considered 0 in the formula. Therefore, their tax due would be (25% * 0) - R150 000, which simplifies to -R150 000. This negative tax due means that the person would receive a payment from the government equal to the amount of R150 000. Therefore, the correct answer is B) R150 000.

Suppose a Negative Income Tax System Is Established and the Formula