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In the United States, the Earned Income Tax Credit ( EITC ) is a tax credit that supplements the earnings of low - income workers
In the United States, the Earned Income Tax Credit EITC is a tax credit that supplements the earnings of lowincome workers with children. For a qualifying single individual with one child, the structure of the EITC in the year is as follows. A credit on each dollar of income earned up to a maximum credit of $ The maximum credit is reduced by for each dollar earned above $ Based on these parameters, please answer the following. a What is the "phase in region for the EITC? In other words, what is the income range over which the earnings of this individual is subsidized? You may answer using a graph, an equation or using words. If you choose to characterize the phasein region using words, then your answer must be very precise. marks b What is the "break even" level of earnings above which a single worker no longer receives an EITC subsidy? marks c Based on your answers to parts a and b and the parameters of the EITC, draw a figure showing the budget constraint of a single worker under the EITC. Your figure should clearly label the axis, axis and the income cutoffs and marks d In one paragraph or less, explain how the EITC affects the incentive to work for i individuals with earnings below ii individuals with earnings between and iii individuals with earnings between and and iv individuals with earnings above marks
In the United States, the Earned Income Tax Credit EITC is a tax credit that supplements the earnings of lowincome workers with children. For a qualifying single individual with one child, the structure of the EITC in the year is as follows.
A credit on each dollar of income earned up to a maximum credit of $
The maximum credit is reduced by for each dollar earned above $
Based on these parameters, please answer the following.
a What is the "phase in region for the EITC? In other words, what is the income range over which the earnings of this individual is subsidized? You may answer using a graph, an equation or using words. If you choose to characterize the phasein region using words, then your answer must be very precise. marks
b What is the "break even" level of earnings above which a single worker no longer receives an EITC subsidy? marks
c Based on your answers to parts a and b and the parameters of the EITC, draw a figure showing the budget constraint of a single worker under the EITC. Your figure should clearly label the axis, axis and the income cutoffs and marks
d In one paragraph or less, explain how the EITC affects the incentive to work for i individuals with earnings below ii individuals with earnings between and iii individuals with earnings between and and iv individuals with earnings above marks
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