consider-a-negative-income-tax-system-where-taxes-are-calculated-as-one-fourth-o

Question

Consider a negative income tax system where taxes are calculated as one-fourth of income minus $$10,000. How does this system affect a family earning 15$$,000 compared to a family earning $50,000?

Accepted Answer

The $$15,000 family receives a subsidy, while the 50$$,000 family pays taxes.

Answer

The $$50,000 family receives a larger subsidy than the 15$$,000 family.

Answer

Both families pay taxes.

Answer

Both families receive the same subsidy.

Consider a negative income tax system where taxes are calculated as one-fourth of income minus \$10,000. How does this system affect a family earning \$15,000 compared to a family earning \$50,000?