Final answer:
The WITB boundaries and clawback values listed in the question are incorrect; the actual values vary based on several factors. A hypothetical example given in the question with a $10,000 government guaranteed income and $0.50 reduction for each $1 earned provides a vertical intercept of $10,000 and a horizontal intercept when $20,000 is earned through work.
Step-by-step explanation:
The student's question refers to the Working Income Tax Benefit (WITB), a refundable tax credit aimed at providing financial relief to low-income individuals and families who are currently working. It seeks to incentivize work by offering a financial boost to the working poor. The question seems to be looking for the income levels at which the WITB starts to be reduced (the clawback boundary) and completely phased out. However, the values provided in the question options (A to D) do not correspond to the actual WITB thresholds, which are subject to change and vary by province or territory and by the individual's or family's situation in Canada.
Instead, let's look at an example of how a budget constraint line, which is similar to WITB, operates. If we consider a hypothetical program where an individual earns $9.00 an hour and receives a guaranteed minimum government support of $10,000, with a reduction of $0.50 for every $1.00 earned, we can calculate the intercepts for this scenario's budget constraint line. The government benefit acts as a basic income, reducing the detrimental effects of poverty and encouraging work by allowing individuals to keep some earnings on top of the benefit.
The vertical intercept of the budget constraint line represents the maximum amount of income from government benefits if the individual does not work at all, which in this example is $10,000. The horizontal intercept is calculated by finding the point where the individual's earnings equal the guaranteed minimum income, factoring in the reduction in government support. That is, when the earnings from work exactly offset the benefit reduction. With a $10,000 guaranteed income and a $0.50 reduction for each dollar earned, the horizontal intercept would be when the person has earned $20,000 through work (since every dollar earned reduces the $10,000 government benefit by half). Assuming the maximum hours for work or leisure is 2,500 hours, the individual would reach this point without additional government benefits.