Question

Suppose the government implements a negative income tax plan to deal with the poverty problem. The negative income tax rate is set at 50%, and the break-even level of income is set at $5,000. The guaranteed annual income level assured each family, regardless of the amount of income earned by the family, is

Answer 1

Answer:

At least $2,500. If the family's income was $0, then the government will transfer $2,500 to them.

Explanation:

A negative income tax refers to a welfare system where individuals earning below a certain amount, instead of being taxed, receive money transfers from the government.