Say that Centerville currently collects $50 million in business property taxes.
ID: 1206587 • Letter: S
Question
Say that Centerville currently collects $50 million in business property taxes. There are 30,000 employees in Centerville, each making about $35,000 per year. Residents of Centerville pay property taxes equal to about 3% of their annual income. The town is considering reducing business property taxes by 10%.
a) What will be the Centerville change in business property taxes?
b) According to Bartik, a reduction of business property tax rates by 10% can be expected to permanently increase employment in Centerville by how many workers?
c) What will the increase in residential property tax revenues do to the increase in employment in Centerville? Does the business tax deduction “pay for itself?”
Explanation / Answer
Answer a) if we multiply 30,000 employees with their earning that is 35000 per worker this would become "10,50,000".
then we will calculate its 3% of this amount, that woud be 31500, now
we have to calculate 10% of 31500, and this would be 3150, so this 3150 amount will be deducted from the total amount of taxes.
b) This will permanently increase the 3000 workers.