In a negative income tax system, how does the tax liability of a family earning \$30,000 compare to a family earning \$70,000?

• A. The \$30,000 family receives a subsidy, while the \$70,000 family pays taxes.
• B. The \$70,000 family receives a larger subsidy than the \$30,000 family.
• C. Both families receive the same subsidy.
• D. Both families pay taxes.

Answer: (A)