Assignment:
Q1.) Sales Tax: Sales tax on the purchase of a vehicle is calculated on the net purchase price (which is the total purchase price minus the amount allowed by a dealer for any trade-in). The rate of tax for residents in Denver, CO is as follows:
- Colorado state tax: 2.90%
- Regional transportation district (RTD) tax: 1.20%
- Denver city tax: 3.62%
Using the information above, answer the following:
What is the total sales tax to be paid in 2002 on the purchase of a 2002 passenger vehicle with a sales price of $17,000 and a $2,000 trade-in allowance?
How would the sales tax be distributed between the state, the RTD, and the city?
Q2.) Property Tax: Which job should you take? After completing your degree, you have a choice between 2 jobs. Suppose that you do not have a preference in location and have been given the following offers:
- The first position is in Pennsylvania, earning $50,000 a year. You found a starter duplex that you can purchase with the assessed value of $75,000. Property taxes average 2.975% of the purchase price. The state sales tax is 6% on purchases, but this does not apply to food and clothing. The state income tax is 3%.
- The second offer is in Maryland. You would earn $65,000, with a starter duplex assessed at $135,000. In Maryland, property taxes are 2.4% of the purchase price of the property. The sales taxes are 1% higher than in Pennsylvania, and it also applies to food and clothing. Maryland's state income tax is 1.5% higher than Pennsylvania's.
You estimate your annual purchases are approximately $18,000, plus an additional $6,000 in food and clothing.
- What is the difference in cost of living between the 2 locations based on the differences in sales tax, income tax, and property tax?
- What factors will you consider when deciding which job to choose?
- What would be the better offer for you? Why? Explain in detail.
Provide complete and step by step solution for the question and show calculations and use formulas.