=+d. The late Milton Friedman was critical of the incentives in the AFDC program and proposed a

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=+d. The late Milton Friedman was critical of the incentives in the AFDC program and proposed a different mechanism for supporting the poor. He suggested a program, known as the negative income tax, that works something like this: Everyone is guaranteed $25 per day that he or she receives regardless of how much he or she works. Every dollar from working, starting with the first one earned, is then taxed at t 5 0.2. Illustrate our worker’s budget constraint assuming AFDC is replaced with such a negative income tax.

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