The incentive to work and the negative income tax.

Question

Want to see the full answer?

Answer 1

Question

Chapter 12, Problem 20SQ

To determine

The incentive to work and the negative income tax.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

97. If the United States is to reduce poverty by using a negative income tax, the guaranteed income should be a. above the poverty line. b. close to the median income of all families. c. two times the tax rate. d. close to the poverty line.

Poverty Trap 7. The American Poverty Trap is a phrase used to describe the tendency for individuals below the poverty line to remain there due to the structure of America's safety-net income stabilization programs. 8. The issue is that federal and state benefits decline as a worker goes from being unemployed to becoming fully employed. As earned income increases, the amount of benefits fall. 9. Thus, the marginal benefit of working is increased income, but the marginal cost includes declining benefits, and a loss of leisure time. 10. Federal and state programs are designed so that as the worker nears the poverty line, the increase in income is matched by a decline in benefits. 11. Thus, the worker gains very little by working more! This structure is actually a disincentive to work. 12. What would be a better solution? End all poverty programs? Provide all citizens a poverty level income stipend? What do you think? What have you been told is the way to avoid being trapped in poverty? D…

FUTA is a federal tax that is paid by employers for each employee to provide _____ compensation to workers who have lost their jobs. a. Medicare b. unemployment c. self employment d. social security