Example: Which is the better investment; 6% mortgages at 10% premium, or 5% bonds at 10% discount?
(1) 110)600(55⁄11%.
(2) 90)500(55⁄9%. 5⁄9 - 5⁄11 = 10⁄99, practically 1⁄10.
Ans. The latter, by 1⁄10 of 1%, nearly.
TAXES AND TAXATION
A tax is a contribution levied on persons, property, incomes, or business, for public purposes.
Some Uses for Taxes.—The National Government requires money to support the army and navy, to pay the salaries of government employes, to pay pensions, and to finance other activities carried on by the nation.
The State Governments require money for the expense of their officers, and to support their various institutions, schools, universities, asylums, and penitentiaries.
The counties require money for the building of bridges, the trial of criminal cases, the salaries of officers, the relief of the poor, etc.
Cities must pay for police and fire protection, care of streets, etc.