The negative income tax has been proposed as a means of increasing both the efficiency and the
Question:
After-tax income = 8000 + (1 - 0.35) X (Earned income)
a. On a scale diagram with after-tax income on the vertical axis and earned income on the horizontal axis, draw the NIT relationship between earned income and after-tax income.
b. What is the level of income at which taxes paid on earned income exactly equal the guaranteed annual income?
c. The average tax rate is equal to total net taxes paid divided by earned income. Provide an algebraic expression for the average tax rate.
d. On a scale diagram with earned income on the horizontal axis and tax rates on the vertical axis, plot the average and marginal tax rates for the NIT. Is the NIT progressive?
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Related Book For
Microeconomics
ISBN: 978-0321866349
14th canadian Edition
Authors: Christopher T.S. Ragan, Richard G Lipsey
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