Reference no: EM131983351

Problem

A state intangibles tax is levied on the holders of intangible personal property in the state. The tax base is market value of the item of property on the last day of December; for most taxpayers, intangible holdings in December establish tax due by April 15 of the next year (paid with the annual income tax return). Tax rates have been 0.0025 percent, but a phase out of the tax begins in calendar year 2007. In that year, the rate will be 0.00233 and in the following year, 0.00217. Fiscal year (July 1-June 30) collections for the tax from 1999 through 2005 follow, along with estimates previously prepared for fiscal 2006 and 2007 and calendar-year data on state personal income. Both income and collections are in millions. Collections ($) Personal Income ($) 1999 15.6 26,158 2000 17.8 27,776 2001 15.7 29,816 2002 17.1 33,206 2003 16.6 37,132 2004 18.4 41,487 2005 22.2 46,279 2006 (forecast) 18.0 Not available 2007 (forecast) 18.5 Not available Estimate revenue from the tax for fiscal years 2007, 2008, and 2009, using any method that is appropriate. (An independent commission has estimated state personal income for the three years to equal $52,660 million in 2007, $59,800 million in 2008, and $67,500 million in 2009.) Describe the method you used and indicate why it is better than other alternatives available.