Final answer:
Noah's landlord includes an indirect tax in the rent to cover property taxes. Property taxes, typically assessed on homeowners, are transferred to renters indirectly through rent. Proposition 13 and similar laws have limited local governments' ability to raise property taxes, leading to payment disparities.
Step-by-step explanation:
The type of tax Noah's landlord includes in the rent to cover the apartment's property tax is known as an indirect tax. Property taxes are assessed by local governments on assets such as homes, land, and businesses. While homeowners like Kimberly and Ian pay property taxes directly to their local government, renters like Noah and Kyle do not pay this tax directly; instead, the landlord pays the property tax and typically passes the cost on to the renters through their monthly rent.
Property taxes are considered progressive taxes, which means that they are generally more burdensome on higher income groups, as these groups are more likely to own valuable property. Issues can arise when local governments over-rely on property taxes, such as the high visibility and lack of popularity of large lump sum payments. Restrictions on the ability of local governments to raise property taxes started with California's Proposition 13, leading to disparities in what neighbors could be paying for similar properties.