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 = (1/3 of income) - $15,000
-Refer to Scenario 20-3.A family earning $60,000 before taxes would have how much after-tax income?

Question

Quizplus · Accepted Answer

Using the formula, the taxes owed for a family earning $60,000 before taxes would be:
Taxes owed = (1/3 * $60,000) - $15,000
Taxes owed = $20,000 - $15,000
Taxes owed = $5,000

Thus, the family's after-tax income would be:
After-tax income = $60,000 - $5,000
After-tax income = $55,000

Therefore, the best choice is C.

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