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The government would like to subsidize low income wages. For the first 20 hours that Mary works in a week, the government will pay her
The government would like to subsidize low income wages. For the first 20 hours that Mary works in a week, the government will pay her an additional $2 per hour (thus raising her wage to $17 for each hour worked up to 20). However, starting at 20 hours of work, the government will no longer subsidize wages. Instead it will tax wages. The government will levy a tax of $2 per hour on all hours worked above 20 hours (thus lowering her wages to $13 for every hour of work over 20)
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