Question

PLEASE TYPE ANSWER

1. In an annual budget message, one city’s mayor remarked, “I am particularly pleased that due to our sound financial planning and careful budgeting, no property tax increase is needed this year.” Yet a careful examination of the detailed budget submitted by the mayor showed expected property tax revenue in the coming year to be 10 percent greater than in the previous year. How can you explain the apparent contradiction in the mayor’s statement and proposed budget?

Answer 1

Answer:

In the above statements, the property tax has remained constant, however, expected property tax revenue has increased in the coming years.

This can be explained by the fact that property tax is levied as a percentage of the valuation of the property. Since the tax is constant but the tax revenue has increased, this can be explained by the fact that valuation of property has increased over the years.

This increase in the valuation of property has led to increase in property tax revenue without any increase in the property tax.