Question

The property taxes on a house that Alan owns and rents out have increased. To balance his monthly budget, he decides to increase his tenants’ rent by $10 per month. He will use the extra money to pay his property tax. In this scenario, what type of tax do his tenants pay?

Answer 1

Post Test: Government

Economics

Question #10

The property taxes on a house that Alan owns and rents out have increased.

To balance his monthly budget, he decides to increase his tenants’ rent by $10 per month.

He will use the extra money to pay his property tax. In this scenario, what type of tax do his tenants pay?

Answers:

A. direct tax

B. estate tax

C. excise tax

D. gift tax

E. indirect tax

The 100% correct answer is:

E. Indirect Tax

Step-by-step explanation:

I took the test, this is 100% it.

Hope it helped! <3

Answer 2

Answer: Indirect Tax

Step-by-step explanation:

Indirect tax is a term that describes a scenario where the tax imposed on an entity is passed onto another entity which means that the second entity is being indirectly taxed by the taxing authority.

Value Added Taxes are an example of this because they are charged on retailers and suppliers who simply pass it on to consumers. This is a similar scenario because Alan is passing on the taxes placed on him to his tenants.