Assume that the government proposes a negative income tax that calculates taxes owed by the formula,
Taxes Owed = (a x Income) - b. A family with an income of $40,000 pays $5,000 in taxes, and a
family with an income of $12,000 receives an income subsidy of $2,000.

a. What is the value for “a"?

b, What is the value for “b"?

c. What is the tax liability of a family with an income of $50,000?

d. At what level of income will a family neither pay taxes, nor receive an income subsidy?

Question

Assume that the government proposes a negative income tax that calculates taxes owed by the formula,
Taxes Owed = (a x Income) - b. A family with an income of $40,000 pays $5,000 in taxes, and a
family with an income of $12,000 receives an income subsidy of $2,000.

a. What is the value for “a"?

b, What is the value for “b"?

c. What is the tax liability of a family with an income of $50,000?

d. At what level of income will a family neither pay taxes, nor receive an income subsidy?

Quizplus · Accepted Answer

The Answer of Assume that the government proposes a negative income tax that calculates taxes owed by the formula,
Taxes Owed = (a x Income) - b. A family with an income of $40,000 pays $5,000 in taxes, and a
family with an income of $12,000 receives an income subsidy of $2,000.

a. What is the value for “a"?

b, What is the value for “b"?

c. What is the tax liability of a family with an income of $50,000?

d. At what level of income will a family neither pay taxes, nor receive an income subsidy?

Assume That the Government Proposes a Negative Income Tax That