With a negative income tax that has a $10,000 guaranteed minimum income and a 25 percent tax rate,a household that has earned income of $16,000 has a total income of

Question

Quizplus · Accepted Answer

The household earns $16,000 and pays 25% tax on it, which is $4,000. The guaranteed minimum income is $10,000, so they receive $10,000 - $4,000 = $6,000 from the government. Total income is $16,000 + $6,000 = $22,000.

With a Negative Income Tax That Has a $10,000 Guaranteed