Reference no: EM133131961
1. Consider an EITC program that offers a guaranteed income level. Assume a person can receive a maximum EITC benefit of $5,000 when earned income is $0; however, the maximum benefit is reduced at a 40% phase-out rate for each dollar earned beyond $0. If the wage rate is $10 per hour and a person works for 300 hours, what is the effective take-home wage rate?
2. Consider ar EITC program that offers a guaranteed income level. Assume a person can receive a maximum EITC benefit of $5,000 when earned income is $0; however, the maximum benefit is reduced at a 40% phase-out rate for each dollar earned beyond $0. If 40% is the phase-out rate, what is the marginal tax rate on EITC benefits if earned income is positive but less than the break-even point?
3. Consider a EITC program that offers a guaranteed income level. Assume a person can receive a maximum EITC benefit of $5,000 when earned income is $0; however, the maximum benefit is reduced at a 40% phase-out rate for each dollar earned beyond $0. If 40% is the phase-out rate, what is the marginal tax rate on EITC benefits if earned income is $0.
4. Consider a EITC program that offers a guaranteed income level. Assume a person can receive a maximum EITC benefit of $5,000 when earned income is $0; however, the maximum benefit is reduced at a 40% phase-out rate for each dollar earned beyond $0.
If 40% is the phase-out rate, what is the marginal tax rate on EITC benefits if earned income is greater than the break-even point?
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