To Avoid an Increase in the Local Property Tax, Sullivan

question 69

Multiple Choice

To avoid an increase in the local property tax, Sullivan County, New York, proposed a 2 percent hotel tax, which presumably would be passed on to tourists. The hotel industry argued that the tax would hurt hotel business. They are really arguing that

• A)tourist and convention demand is inelastic, so hotel bookings will decline.
• B)tourist and convention demand is very elastic, so hotel bookings will decline.
• C)they would prefer a property tax increase instead.
• D)it is unfair to tax people who do not live in the area.

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Definitions:

Dividend Income

Income received from owning shares in a company, which represents a distribution of the company's earnings.

Schedule M-1

A form used in corporate taxation to reconcile financial statement income with taxable income reported on U.S. federal tax returns.

Book Income

The income reported by a business for financial accounting purposes, which may differ from taxable income due to different accounting methods.

Taxable Income

The portion of income that is subject to income tax after deductions and exemptions.