A country has a negative income tax regime.
The curve NT in the diagram shows the country's initial tax schedule.
[Figure 15.1]
A change in the tax rate causes the schedule to shift to NT1.
How will this affect work incentives and the after-tax distribution of income?

Q: What topic does this question test?

This question tests Government Intervention / Income Redistribution and Taxation in A-Level Economics (syllabus code 9708). It is worth 1 mark.

Q: Which exam paper is this question from?

This question appeared in the Cambridge A-Level Economics Oct/Nov 2019 examination, Paper 3 Variant 2 (9708_w19_qp_32.pdf).

Question

A country has a negative income tax regime.
The curve NT in the diagram shows the country's initial tax schedule.
[Figure 15.1]
A change in the tax rate causes the schedule to shift to NT1.
How will this affect work incentives and the after-tax distribution of income?

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A country has a negative income tax regime. The curve NT in the diagram shows the country's initial tax schedule. [Figure 15.1] A change in the tax rate causes the schedule to shift to NT1. How will this affect work incentives and the after-tax distribution of income?

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