Jack currently owns his house and a property tax is imposed that requires 10% of the property value to be paid each year into the future as a tax. Jack sells his house to Jill who intern sells it to Tim two years later. Considering capitalization who is likely to bear the most burden of the property tax?

1. State who receives the most tax burden.

2. Clearly show, using a mathematical representation, how capitalization illustrates this tax incidence.

Answer rating: 100% (QA)

Property Tax Burden with Capitalization 1 Who Receives the Most Tax Burden In this scenario Tim is l... View the full answer