A proposal for a negative income tax is designed to provide an income guarantee for each person, irrespective of his or her age or status, of $3000 per year. Thus a family of four would have an income guarantee of $12,000 per year. The transfers under the program will be phased out at a rate of 25% as earned income increases. Calculate the break-even level of income for a family of four.

A proposal for a negative income tax is designed to provide an income guarantee for each person, irrespective of his or her age or status, of $3000 per year. Thus a family of four would have an income guarantee of $12,000 per year. The transfers under the program will be phased out at a rate of 25% as earned income increases. Calculate the break-even level of income for a family of four.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter15: Poverty And Economic Inequality

Section: Chapter Questions

Problem 41CTQ: Redistribution of income occurs through the federal income tax and government antipoverty programs....

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