Under a negative income tax,
A)Only the poor would receive negative taxes
B)We would experience a loss in efficiency relative to the current public assistance programs
C)The recipients of government subsidies are encouraged to earn income
D)Both (a)and (c)
E)All of the above

Question

Quizplus · Accepted Answer

Under a negative income tax system, only the poor would receive negative taxes, and the recipients of government subsidies are encouraged to earn income. This is because the amount of the subsidy decreases as income increases, creating an incentive to work. As for efficiency, a negative income tax system is often seen as more efficient than current public assistance programs because it eliminates the need for complex bureaucracies to manage and administer multiple programs.

Under a Negative Income Tax