Question
Consider a person who has no non-labor income and can work up to 110 hours each week at a pre-tax wage of $30 per hour
Consider a person who has no non-labor income and can work up to 110 hours each week\ at a pre-tax wage of $30 per hour but faces a constant 20% payroll tax. Under these\ conditions, she finds it optimal to work 60 hours per week. The government proposes a\ negative income tax whereby everyone is given $500 each week and anyone can\ supplement her income further by working. To pay for the negative income tax, the\ payroll tax rate will be increased to 60%.\ a. On a single graph, draw the workers original budget line (BC0) AND her budget\ line under the negative income tax (BCNIT). Be sure you label your axes, lines,\ slopes, and intercepts.
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