It occurs due to the change in effective tax rates in the form of property tax amount related to the market value among the groups of property owners. It is known that the appraised market value in the form of yardstick for the property tax equity was used because it is considered as a reasonable way (Dennis-Escoffier & Fortin, 2007; Mikesell, 2011; Nelson, Collins, & Healy, 2008).
Economic Effects
The tax on property and buildings apart from the land distorts the resource allocation with the presence of older property. The increase in property tax rates because the decline in the desirability of placing capital funds into new buildings while creating an incentive against the upgrading of quality. It further leads to the construction of smaller rooms and apartments as compared to the ones that were not required to pay taxes. Certain communities can have tax bases above averages relating to the governmental obligations with lower tax rates. In this way, property tax rates attract the capital causing certain communities to exclude the type of property related to the governmental expense, which can bring the children for which the requirement of schools can increase (Mikesell, 2011; Dennis-Escoffier & Fortin, 2007; Spencer, 2012).
Conclusion
It can be concluded that the tax structure is consisted of different elements but sales tax, income tax, and property tax are of considerable significance. It is found that these tax structures have relative advantages and disadvantages in the context of revenue production, equity, and economic effects. These features provide the significant impact on the people and country.
Reference
Ault, H.J., & Arnold, B.J. (2010). Comparative Income Taxation: A Structural Analysis. Kluwer Law International.
Dennis-Escoffier, S., & Fortin, K.A. (2007). Taxation for Decision Makers. Cengage Learning.
Mikesell, J.L. (2011). Fiscal Administration: Analysis and…
Sample Source(s) Used
Reference
Ault, H.J., & Arnold, B.J. (2010). Comparative Income Taxation: A Structural Analysis. Kluwer Law International.
Dennis-Escoffier, S., & Fortin, K.A. (2007). Taxation for Decision Makers. Cengage Learning.
Mikesell, J.L. (2011). Fiscal Administration: Analysis and Applications for the Public Sector. Cengage Learning.
Nelson, B.M., Collins, J.T., & Healy, J.C. (2008). Sales and Use Tax Answer Book. CCH.
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