**Understanding Tax Benefits for Higher-Income Landlords****Question:**What best describes why higher-income people are more likely to be landlords in terms of tax benefits?**[Note: this question is vague, so you should understand why the answer matters]****Options:**- Higher-income people pay lower property taxes- Higher-income people have a higher marginal tax rate- Higher-income people can afford more expensive houses- Higher-income people have a higher opportunity cost of owning a home---**Explanation:**This question explores the reasons behind the tendency of higher-income individuals to become landlords, particularly focusing on tax benefits. Understanding the nuances behind each option is crucial as it relates to fiscal strategies and economic behavior of higher-income groups in the housing market.- **Higher-income people pay lower property taxes**: Property taxes generally depend on the value of the property and the tax rate set by local governments. This option implies a misalignment with common property tax structures since higher-value properties typically incur higher property taxes. Consider examining whether lower overall property tax burdens due to investments in multiple properties could be a factor.- **Higher-income people have a higher marginal tax rate**: A higher marginal tax rate means higher-income people pay a larger percentage of their income in taxes as their income increases. The significance of this option lies in potential tax deductions and benefits associated with rental income and property-related expenses, which can reduce taxable income.- **Higher-income people can afford more expensive houses**: Affordability of more expensive properties can lead to ownership of rental properties, increasing potential rental income streams. The relationship between affording more significant investments and leveraging them for tax benefits through depreciation and other deductions is a critical area to consider.- **Higher-income people have a higher opportunity cost of owning a home**: This option is about the economic principle of opportunity cost. For higher-income individuals, the cost of forgoing other investments or opportunities when owning a property might be higher. They may find tax benefits attractive enough to offset these opportunity costs, making property investment a strategic choice.Understanding these aspects can contribute to a more nuanced perspective on economic behavior and tax strategies in the real estate market.

A tax benefit alludes to a financial advantage or decrease in tax liability given by the public…

What best describes why higher-income people are more likely to be landlords in terms of tax benefits? [Note: this question is vague, so you should understand why the answer matters] O Higher-income people pay lower property taxes O Higher-income people have a higher marginal tax rate

What best describes why higher-income people are more likely to be landlords in terms of tax benefits? [Note: this question is vague, so you should understand why the answer matters] O Higher-income people pay lower property taxes O Higher-income people have a higher marginal tax rate

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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