According to the negative income tax, the breakeven income level for a program whose tax credit is $3,000 and whose tax rate is 30 percent would be

Question

Quizplus · Accepted Answer

The negative income tax formula is: 
Tax credit + (Tax rate x Income) = Support payment

We need to find the breakeven income level where the support payment is zero. 
So, substituting 0 for the support payment:
$3,000 + (0.3 x Income) = 0

Solving for Income: 
0.3 x Income = -$3,000 
Income = -$3,000 / 0.3 
Income = -$10,000

Since income cannot be negative, we take the absolute value of income, which gives us $10,000 as the breakeven income level. Therefore, the answer is A) $10,000.

According to the Negative Income Tax, the Breakeven Income Level