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Finance a la shmoop what is an ad valorem tax? want to impress and amaze your friends

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with your mastery of Latin yeah we had the same thought you need new friends ad [Girl holding Latin book and shows her friends]

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valorem means according to value that is an ad valorem tax is a tax based on the

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value of the asset being assessed..well why is that even a point of contention

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well you can imagine a tax on gate entry into a public park some people are worth [People cycling in a public park]

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a lot like you know if Bill Gates just happens to walk in it's worth a lot and [Bill Gates walking in a park]

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some people are not worth much like Vin Diesel's personal hair stylists those

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would be not ad valorem taxes they'd just be taxes..sales tax that's ad

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valorem like the tax for buying a car in California is say 8% buy a new Prius for

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35k and you pay about 3k in taxes buy a Maserati that does 185 and [Maserati car zooms past the road]

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coincidentally it costs 185 and you'll pay about 8% on that number or about 15

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grand for the pleasure of being the target of every jealous cop in the [Police cars chase Maserati]

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district well how about real estate tax ad valorem well it is in most states

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where the annual tax is based on the value of the property itself being taxed

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estate tax well assuming there is still one in the future

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you bet ad valorem it's a sliding scale tax whose amount is derived directly

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from the value of however many oil patch acres Gran-mama [Oil machine working]

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is leaving to young Jethro.. So there you've just expanded your mastery of

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Latin but we're gonna end this video here so we don't go on ad nauseam

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