State and local governments collect revenue through sales and property taxes. In many states and cities, a sales tax, sometimes called a transaction tax, is added to purchases like
clothing, restaurant meals and toys. For example, the sales tax in New York City is 8.875
percent, so an item's actual cost is 1.08875 times the price on the sticker.
Property taxes are a tax that the government places on the value of things you own. These
taxes are often placed on houses, apartments, land and other real estate. They are
percentage-based, so the amount of tax depends on the value of the property. Like sales
taxes, property taxes are not equal everywhere. Different states, cities and towns have
different tax rules.
Which of the following best describes property taxes?
A
They are the same no matter where you live.
B They only apply to houses that are larger than 2,500 square feet.
C They increase as the value of the property increases.
D
They are always at a rate of 8.87 percent.