Scenario 20-2
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) - $20,000
-Refer to Scenario 20-2.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 (1/4 of income) - $20,000 < 0, we solve for income: (1/4 of income) < $20,000, which means income < $80,000.

Scenario 20-2 Suppose the Government Implemented a Negative Income Tax and Used