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.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 (1/3 of income) - $15,000 < 0, we solve for income: (1/3 of income) < $15,000, which gives income < $45,000.

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