Half of Metroburg's operating budget comes from a payroll tax of 2 per

Half of Metroburg's operating budget comes from a payroll tax of 2 percent on salaries paid to people who work in the city. Recently a financial services company, one of Metroburg's largest private-sector employers, announced that it will be relocating just outside the city. All the company's employees, amounting to 1 percent of all people now employed in Metroburg, will be employed at the new location.

From the information given, which of the following can most properly be concluded?


A) Unless other employers add a substantial number of jobs in Metroburg, the company's relocation is likely to result in a 1 percent reduction in the revenue for the city's operating budget.

B) Although the company's relocation will have a negative effect on the city's tax revenue, the company's departure will not lead to any increase in the unemployment rate among city residents.

C) One of the benefits that the company will realize from its relocation is a reduction in the taxes paid by itself and its employees.

D) Revenue from the payroll tax will decline by 1 percent if there is no increase in jobs within the city to compensate, fully or partially, for the company's departure.

E) The company's relocation will tend to increase the proportion of jobs in Metroburg that are in the public sector, unless it results in a contraction of the public-sector payroll.


CR08540.02