Asked by Emily Esparza on Jul 01, 2024
Verified
Refer to Scenario 20-3. This negative income tax would guarantee what minimum level of income to every family?
A) $14,000
B) $18,000
C) $16,000
D) $11,000
Negative Income Tax
A system where individuals earning below a certain amount receive supplemental pay from the government instead of paying taxes.
Tax Liability
The total amount of taxes an individual or organization owes to the tax authorities.
Income Subsidy
Financial assistance programs provided by governments or institutions to individuals or groups to help supplement their income, typically aimed at the needy or to promote certain economic activities.
- Understand the concept and mechanisms of a negative income tax.
Verified Answer
TC
Tanner ClubbsJul 07, 2024
Final Answer :
C
Explanation :
For a family to have a guaranteed minimum level of income, the tax owed would be zero (Taxes owed = 0). Using the formula (1/4 of income) - $16,000 = 0, solving for income gives a guaranteed minimum income of $16,000.
Learning Objectives
- Understand the concept and mechanisms of a negative income tax.