Question

What does the term negative refer to in a negative income tax scheme?

A.The individual does not have to pay income tax for any of his/her earnings.

B.The individual receives a subsidy or a credit rather than paying taxes for a certain number of hours worked.

C.The program does not involve any disincentives to working.

D.The program involves fewer disincentives to working than does a conventional welfare or social assistance program.

For which of the following programs does the recipient receive a supplement from the government for each hour worked?

A.A wage subsidy program

C.A negative income tax program

C.An unemployment insurance program

D.Guaranteed Income Supplement

Which of the following statements concerning the work incentive (or disincentive) effects under a wage subsidy program and under a negative income tax program is true?

A.The negative income tax program is neutral in regards to these effects.

B.The wage subsidy program is neutral in regards to these effects.

C.The negative income tax program has a greater positive effect on the incentive to work.

D.The wage subsidy program has a greater positive effect on the incentive to work.

What is the approximate rate at which lost earnings are replaced by Canada's unemployment insurance system?

A.100% of all earnings up to a certain threshold, and 0% for wages above that level

B.55% of all earnings

C.55% of all earnings up to a certain threshold, and 0% for wages above that level

D.0% of earnings up to a certain threshold, and 55% for wages above that level

The reason for which worker's disability insurance can potentially have adverse effects on work incentives is that:

A.the income that it provides enables one to reach a certain income level without any work obligation.

B.the opportunity cost of leisure increases.

C.the recipient is allowed to work as many hours as he/she can without losing any of the benefits.

D.the taxes that finance the benefits can have negative effects on labour demand.

Answer 1

Question 1

The negative income system is tax framework in which government supports the income of a person by providing him or her with supplemental income instead of charging income tax if his or her income is below a certain threshold.

So, up to a level of income, instead of paying taxes, person receives the income from the government.

Thus, the negative in the negative income tax scheme implies that the individual receives a subsidy or a credit rather than paying taxes for a certain number of hours worked.

Hence, the correct answer is the option (B)