Final answer:
Sarah's eligibility for the maximum Oregon Working Family Credit depends on various factors, and earning $8000 with $1900 in child care expenses does not automatically qualify her for the maximum credit percentage. Assistance programs can affect work incentives, and phase-out mechanisms in tax credits are designed to avoid the poverty trap.
Step-by-step explanation:
False. According to the information related to the Oregon Working Family Credit, Sarah earning $8000 and having $1900 in child care expenses for her four children last year would not necessarily qualify her for the maximum (40%) Oregon Working Family Credit without additional information regarding her income threshold and the specific criteria for the credit. The Oregon Working Family Credit percentage is often based on the taxpayer's income and number of qualifying children, among other factors.
The example provided, which discusses Susan and her work hours and income, illuminates how assistance programs like the Earned Income Tax Credit may affect incentives to work. Susan's scenario involves managing her work hours, earnings, government support, and total income, which are depicted through a table that considers potential reductions in government support as she earns more from work. While this does not directly relate to Sarah's question, it provides context for how work-related earnings and government assistance can interact.
Also important is the consideration of the ‘poverty trap,’ where earning more money might lead to a reduction in government support. This is mitigated through a gradual phase-out of tax credits, allowing lower-income workers to continue benefiting from some support as they increase their earnings.