ECONOMICS
INCOME DISTRIBUTION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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People receive less income as they earn more money on the job.
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People receive more income as they earn more money on the job.
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People have no incentive to work.
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People that do not have a job do not get any handouts from the government.
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Detailed explanation-1: -In economics, a negative income tax (NIT) is a system which reverses the direction in which tax is paid for incomes below a certain level; in other words, earners above that level pay money to the state while earners below it receive money, as shown by the blue arrows in the diagram.
Detailed explanation-2: -A negative net income means a company has a loss, and not a profit, over a given accounting period.
Detailed explanation-3: -Negative income tax comes into mention in a year when you have suffered losses, and not earned any income. This is applicable only to self-employed individuals, since if salaried individuals do not earn any income in a particular year, they fall into the 0 tax bracket which implies they are not liable to pay any taxes.
Detailed explanation-4: -The main characteristic features of a tax are as follows: (1) A tax is a compulsory payment to be paid by the citizens who are liable to pay it. Hence, refusal to pay a tax is a punishable offence. (2) There is no direct quid-pro-quo between the tax payers and the public authority.