With a negative income tax featuring an $8,000 minimum level of income and a 20 percent tax rate, a household earning $8,000 would receive a subsidy of:

Question

Quizplus · Accepted Answer

A household earning $8,000 would receive a subsidy of $1,600 under a negative income tax with an $8,000 minimum level of income and a 20 percent tax rate. This is because the household would owe no taxes on its income, and would receive a subsidy of 20 percent of the minimum income level, which is $1,600.

With a Negative Income Tax Featuring an $8,000 Minimum Level