Assume that the government proposes a negative income tax that calculates taxes owed by the formula, Taxes Owed = (a 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  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  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