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1-2 Chapter 19 Sales, Excise, and Property Taxes McGraw-Hill/Irwin Copyright © 2003 by The McGraw-Hill Companies, Inc. All rights reserved.

1-3 Compute sales tax on goods sold involving trade and cash discounts and shipping charges Explain and calculate excise tax Sales, Excise, and Property Taxes #19 Learning Unit Objectives Sales and Excise Taxes LU19.1

1-4 Taxes paid on certain goods and services Sales Tax The sales tax percent is set by each state. Merchants collect funds and forward them to government agencies

1-5 Sales Tax Compute sales tax and total price given the following information: Selling price of computer $700 Shipping charge $10.00 Trade discount 5% Sales Tax 5% Net Price $700 x.05 = $35 $700 - $35 = $665 Sales Tax $665 x.05 = $33.25 Cost$ Tax Shipping Total $708.25

1-6 Calculating Actual Sales Actual sales = Total sales 1 + tax rate Register receipts total $5,000 for the day, which included a 6% sales tax. What are actual sales? $5,000 = $4, Check: Sales $4, x.06 = $ $4, $ = $5,000

1-7 Tax is based on a percentage of the retail price of a product or service Excise Tax Imposed on luxury items or nonessentials

1-8 Excise Tax Barbara Fu bought a Mercedes Benz for $80,000. Sales tax is 6% and excise tax is 8%. What is her total cost? Cost$80,000 Sales tax$80,000 x.06 = $4,800 Excise tax$80,000 x.08 = $6,400 Total cost$91,200

1-9 Calculate the tax rate in decimal Convert tax rate in decimal to percent, per $100 of assessed value, per $1,000 of assessed value, and in mills Compute property tax due Sales, Excise, and Property Taxes #19 Learning Unit Objectives Property Tax LU19.2

1-10 Assessed value - The value of property for the purposes of computing property taxes Property Tax Assessed value = Assessment rate x Market value Property taxes pay for local fire and police protection, schools, etc. They are based on assessed value.

1-11 Step 2. Identify tax rate Town budget needs Total assessed value Step 3. Calculate property tax due Tax rate x assessed value Step 1. Compute assessed value Assessment rate x Market value Calculating Property Tax

1-12 Calculating Property Tax Town Budget $5,000,000 Market value of home $160,000 Assessed rate 25% Total assessed values $65,000,000 *Rounded to nearest ten thousandth $160,000 x.25 = $40,000 $5,000,000/$65,000,000 = $40,000 x.07692* = $3,076.80

1-13 Calculating Property Tax The Town of Pliver has approved next year’s budget of $1,355,000. The total property value in the town is $58,600,000. The State has determined their assessment ratio to be 95%. What will next year’s tax rate be? 1355/58600 =.0231 What will be the taxes on a home valued at $150,000? x.95 = x.0231 =

1-14 Expressing Tax Rates Per $100 ofPer $1,000 of In By percent assessed valueassessed value mills 7.69%$100 x R%$1,000 x R% R /.001 $7.69 $ $5,000,000/$65,000,000 =

1-15 Expressing Tax Rates Per $100 ofPer $1,000 of In By percent assessed valueassessed valuemills 7.69% $7.69 $ Taxes on a home with a value of $40,000: Per $100 ofPer $1,000 of By percent assessed valueassessed value In mills $40,000 x 7.69% $3,076 $5,000,000/$65,000,000 =

1-16 Expressing Tax Rates Per $100 ofPer $1,000 of In By percent assessed valueassessed valuemills 7.69% $7.69 $ Taxes on a home with a value of $40,000: Per $100 ofPer $1,000 of By percent assessed valueassessed value In mills $40,000 $40,000 / 100 x 7.69% = $ x $7.69 $3,076 $5,000,000/$65,000,000 =

1-17 Expressing Tax Rates Per $100 ofPer $1,000 of In By percent assessed valueassessed valuemills 7.69% $7.69 $ Taxes on a home with a value of $40,000: Per $100 ofPer $1,000 of By percent assessed valueassessed value In mills $40,000 $40,000 / 100$40,000 / 1000 x 7.69% = $400 = x $ x $3,076 $3,076 $3,076 $5,000,000/$65,000,000 =

1-18 Expressing Tax Rates Per $100 ofPer $1,000 of In By percent assessed valueassessed valuemills 7.69% $7.69 $ Taxes on a home with a value of $40,000: Per $100 ofPer $1,000 of By percent assessed valueassessed value In mills $40,000 $40,000 / 100$40,000 / 1000$40,000 x 7.69% = $400 = 40x x $ x 76.90x $3,076 $3,076 $3,076$3,076 $5,000,000/$65,000,000 =