When household income increases, the disincentive to work is less severe because the loss of government benefits is partly offset by the wage subsidy that is provided with the:
A) Supplemental Nutrition Assistance Program.
B) earned income tax credit.
C) Temporary Assistance for Needy Families program.
D) housing assistance program.

Question

Quizplus · Accepted Answer

The Earned Income Tax Credit (EITC) is designed to offset the impact of Social Security taxes and provide an incentive to work by offering a subsidy that increases with earned income up to a certain point. This makes it unique among the options listed, as it directly ties the benefit to work effort and income, thereby reducing the disincentive to work that might arise from the loss of other types of government benefits as household income increases.

When Household Income Increases, the Disincentive to Work Is Less