Many economists believe that a more effective way to supplement the income of the poor is through a negative income tax. Under this scheme, everyone reports his or her income to the government. Individuals and families earning a higher income will pay a tax based on that income, while low-income individuals and families receive a subsidy, or negative tax. Assume that the only qualification required to receive a tax credit is low income.

Suppose the government uses the following equation to compute a family's tax liability:

Taxes Owed = (1/2 of Income) - $10,000

For each of the incomes listed on the following table, determine the tax liability for a family with that income level. (Note: If a family receives a subsidy because its income is too low, be sure to indicate the tax liability as negative.)

Income Tax Liability

(Dollars per year) (Dollars per year)

___________________________________________________

0 (Fill in the blank)

10,000 (Fill in the blank)

20,000 (Fill in the blank)

30,000 (Fill in the blank)

True or False: If a family is currently receiving a tax credit, the credit is reduced by $0.33 for each additional dollar earned until the family reaches an income of $20,000 and the credit become $0

True Or False?

(Please answer questions in the order they were written so it is easy to follow through and understand).