Question
In: Economics
Sarah makes 100,000 AUD per year from his inherited high-valued real estate assets and would be...
Sarah makes 100,000 AUD per year from his inherited high-valued real estate assets and would be able to earn little income otherwise. Samantha does not have any assets and has a minimum-wage job. Could their ability to pay be the same? Why yes/no?
Solutions
Expert Solution
Ability to pay is an economic principle that states that the amount of tax an individual pays should be dependent on the level of burden the tax will create relative to the wealth of the individual. The application of this principle gives rise to the progressive tax system, a system of taxation in which individuals with higher incomes are asked to pay more tax than individuals with lower incomes. The ideology behind this principle is that individuals and business entities that earn higher income can afford to pay more in taxes than lower-income earners.
In the above situation since Sarah gets a monthly income of $100,000 AUD from her inherited high valued real-estate assets. But Samantha does not have any assets and has a minimum-wage job.
No, their ability to pay can't be same as Sarah earns more than Samantha whatever the source may be. So, if she earns higher income definitely she has a higher ability to pay than a person earning lower income.
Rahul Sunny answered 8 months agoRelated Solutions
You are presented with a real estate investment with cash flow in year 1 of $100,000,...
You are presented with a real estate investment with cash flow
in year 1 of $100,000, increasing by $5,000 per year through year
5. And, you estimate you can sell the deal at the end of the 5th
year for $1,250,000. If your discount rate is 12%, should you buy
the deal at the $1,100,000 asking price?
A) Yes, because the IRR is a positive 9.34%
B) No, because the NPV is a negative $33,455
C) Yes, because the NPV...
This year Drake and his son purchased real estate for an investment. The price of the...
This year Drake and his son purchased real estate for an
investment. The price of the property was $1,200,000, and the title
named Drake and his son as joint tenants with the right of
survivorship. Drake provided $900,000 of the purchase price and his
son provided the remaining $300,000. What is the amount of the
taxable gift?
$300,000.
Incorrect
$600,000.
$285,000.
$1,200,000.
None of the choices are correct - Drake did not make a taxable
gift.
Caleb Bakersfield, a 42-year-old real estate agent, had just returned from a vacation to Russia. His...
Caleb Bakersfield, a 42-year-old real estate agent, had just
returned from a vacation to Russia. His childhood had been rough
because of an alcoholic and abusive father, and Caleb had started
his own drug addiction in his early teens. By his early twenties,
he was addicted to heroin, lived on the streets, and frequently
used dirty needles. In his thirties, Caleb joined a program to beat
his addiction and to turn his life around. The trip to Russia was
to...
Which person would need a real estate license? A person who is selling his own property....
Which person would need a real estate
license?
A person who is selling his own property.
A resident manager collecting rents.
A person negotiating exchanges for another.
A person acting as "Power of Attorney" under a court order
without compensation.
Which of the following situations would be cause for
automatic revocation of a license?
A buyer’s agent lied to his client.
A buyer’s agent lied to the seller.
A broker made a mistake in the bookkeeping of his trust
account....
Greg is a commercial real estate agent in San Diego. He notes from his records that...
Greg is a commercial real estate agent in San Diego. He notes from
his records that the length of time that properties spend on the
market before being sold appears to be normally distributed. From
October 2017 to October 2018, the average time that a property in
San Diego spent on the market was approximately 45 days, with a
standard deviation of 9 days. Typically, if a property doesn’t sell
within 70 days of being listed, Greg’s firm will reduce...
Greg is a commercial real estate agent in San Diego. He notes from his records that...
Greg is a commercial real estate agent in San Diego. He notes from
his records that the length of time that properties spend on the
market before being sold appears to be normally distributed. From
October 2017 to October 2018, the average time that a property in
San Diego spent on the market was approximately 45 days, with a
standard deviation of 9 days. Typically, if a property doesn’t sell
within 70 days of being listed, Greg’s firm will reduce...
Kate recently invested in real estate with the intention of selling the property one year from...
Kate recently invested in real estate with the intention of
selling the property one year from today. She has modeled the
returns on that investment based on three economic scenarios. She
believes that if the economy stays healthy, then her investment
will generate a 30 percent return. However, if the economy softens,
as predicted, the return will be 10 percent, while the return will
be -25 percent if the economy slips into a recession.
1) If the probabilities of the...
Ned Flanders Corporation makes 100,000 units per year of a plastic gasket for use in one...
Ned Flanders Corporation makes 100,000 units per year of a
plastic gasket for use in one of its products. Data concerning the
unit production costs of the one gasket follow:
Direct materials................................................
$0.15
Direct
labor.........................................................
0.10
Variable manufacturing overhead...................... 0.13
Fixed manufacturing overhead........................... 0.24
Total manufacturing cost per unit.................... $0.62
An outside supplier has offered to sell Ned Flanders Corporation
all of the gaskets it requires. If Flanders Corporation decided to
discontinue making and instead buys the gaskets, 25% of...
Ned Flanders Corporation makes 100,000 units per year of a plastic gasket for use in one...
Ned Flanders Corporation makes 100,000 units per year of a
plastic gasket for use in one of its products. Data concerning the
unit production costs of one gasket follow:
Direct Materials: $0.15
Direct Labor: $0.10
Variable Mfg Overhead: $0.13
Fixed Mfg Overhead: $0.24
Total Manufacturing Cost per Unit: $0.62
An outside supplier has offered to sell NFC all of the gaskets
it requires. If Flanders Corporation decided to discontinue making
and instead buys the gaskets, 25% of the above fixed...
You are considering the purchase of real estate that will provide perpetual income that should average $55,000 per year.
You are considering the purchase of real estate that will
provide perpetual income that should average $55,000 per year. How
much will you pay for the property if you believe its market risk
is the same as the market portfolio’s? The T-bill rate is 5%, and
the expected market return is 11.0%
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- - A primary sedimentation basin for a municipal waste water treatment plant treats a flow of...
- Hello I'm currently having an error that says "main is not abstract and does not override...
- Give a direct proof of the following theorem, upon which case you can use it for...
- A7X Corp. just paid a dividend of $1.35 per share. The dividends are expected to grow...
- Please use Java language in an easy way with comments! Thanks! Create a calculator that uses...
- Due Thursday (Normal late penalties apply for late submission.) Respond to the following in a minimum of...
- 1. You must evaluate a proposal to buy a new milling machine. The base price is...
ADVERTISEMENT