Page 191 - Business Principles and Management

Unit 2

FIGURE 7-6 U.S. tax rates are relatively low in comparison to those
of other nations.

Major Taxes for Selected Countries (in Percent)
Germany 50.7%

Sweden 48.6

France 48.3

Spain 37.9

Norway 37

Greece 36

Canada 30.2

United States 30

United Kingdom 29.7

Japan 24.2

Source: Organization for Economic Cooperation and Development
(www.oecd.org), 2001.

Both see this source of taxes as highly attractive. Traditional retailers who pay
sales taxes, however, believe it is unfair for Internet sales not to be taxed.

PROPERTY TAX

A property tax is a tax on material goods owned. Whereas the sales tax is the
primary source of revenue for most state governments, the property tax is the
main source of revenue for most local governments. There may be a real prop-
erty tax and a personal property tax. A real property tax is a tax on real estate,
which is land and buildings. A personal property tax is a tax on possessions
that are movable, such as furniture, machinery, and equipment. Essentially,
personal property is anything that is not real estate. In some states, there is
a special property tax on raw materials used to make goods and on finished
goods available for sale.
A tax on property—whether it is real property or personal property—is stated
in terms of dollars per hundred of assessed valuation.
Assessed valuation is the value of property determined by tax officials. Thus, a
tax rate of $2.80 per $100 on property with an assessed valuation of $180,000 is
$5,040 ($180,000/100 = $1,800; $1,800 $2.80 = $5,040).

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