Question

20) To provide additional employment and add to its tax base from businesses, Yorketown’s city council opened a business park on the edge of the city. After five years, they had attracted two new manufacturers and four supporting service businesses to the park. The total value of the property of all six businesses was $15,825,500. The companies paid $0.78 per $1,000 of property value each year as property tax. In addition, the businesses employed 328 people at an average salary of $36,000. Each person paid a 1 percent city income tax each year.

a) How much yearly tax revenue did the city receive from the businesses?
b) How much did it receive from the employees?

Answer 1

a) The city received approximately $12,344.19 in yearly tax revenue from the businesses. b) The city received approximately $11,827.20 in yearly tax revenue from the employees.

Step-by-step explanation:

a) The total property value of all six businesses in the business park is given as $15,825,500. The businesses pay $0.78 per $1,000 of property value as property tax each year. To calculate the yearly tax revenue from the businesses, we can use the formula:

Total Tax Revenue = Total Property Value imes (Property Tax Rate / 1000)

Plugging in the values, we have:

Total Tax Revenue = $15,825,500 imes (0.78 / 1000) = $12,344.19

Therefore, the city received approximately $12,344.19 in yearly tax revenue from the businesses.

b) The businesses employ 328 people at an average salary of $36,000. Each person pays a 1% city income tax each year. To calculate the yearly tax revenue from the employees, we can use the formula:

Total Tax Revenue = Total Number of Employees imes Average Salary imes (Income Tax Rate / 100)

Plugging in the values, we have:

Total Tax Revenue = 328 imes $36,000 imes (1 / 100) = $11,827.20

Therefore, the city received approximately $11,827.20 in yearly tax revenue from the employees.