Change in business property taxes

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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?”

Reference no: EM131118548

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