21. Matt has a good job on the production line of a factory in his home town. During the past year or two, the state in which Matt lives has been raising taxes on its businesses to the point where they are much higher than in neighboring states. What effect is this likely to have on Matt's job?
a.) Higher business taxes will cause more businesses to move into Matt's state, raising wages.
b.) Higher business taxes can't have any effect on Matt's job.
c.) Matt's company may consider moving to a lower-tax state, threatening Matt's job.
This is the answer but not for the obvious reasons. Often, higher taxes are brought on by the very location of the business. When a company chooses a state in which to set-up its operations, it often looks at numerous factors before deciding. Among those factors is available work force, amenities that keep and attract new workers, and a favorable tax rate. But the services that expanding businesses require and the demands that an increased population following successful businesses place on a community, often leave little wiggle room. With few other options, communities and states begin raising taxes. This does put a damper on corporate profits and may force some businesses to relocate, like Mattıs might do but generally, the tax rate is a side effect of success.
d.) He is likely to get a large raise to offset the effect of higher taxes.
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