Scenario 20-4
Suppose the government implemented a negative income tax and used the following formula to compute a family's tax liability:
Taxes owed = (1/5 of income) - $15,000
-Refer to Scenario 20-4. This negative income tax would guarantee what minimum level of income to every family?
A)$5,000
B)$10,000
C)$15,000
D)$50,000

Question

Quizplus · Accepted Answer

The negative income tax guarantees a minimum income of $15,000 to every family because the formula subtracts $15,000 from 1/5 of the family's income. Therefore, even if a family's income is $0, they would still receive $15,000 in guaranteed income.

Scenario 20-4 Suppose the Government Implemented a Negative Income Tax and Used