With a negative income tax that has a $10,000 guaranteed income and a 25 percent tax rate,a household that has a market income of $4,000 has a total income of

Question

Quizplus · Accepted Answer

The household's negative income tax benefit would be 25% of their market income ($4,000 x 0.25 = $1,000), which is then added to the guaranteed income of $10,000. Therefore, the household's total income would be $11,000 ($10,000 + $1,000), which is option C.

With a Negative Income Tax That Has a $10,000 Guaranteed