What does the formula ETR (Effective Tax Rate) represent?

The Effective Tax Rate (ETR) is represented by the formula that involves millage rates and assessment levels. The millage rate is the amount per $1,000 of assessed property value that is used to calculate local property taxes. The assessment level refers to the percentage of a property’s market value that is assessed for tax purposes.

To calculate the ETR, one would typically multiply the millage rate by the assessment level. This formula reflects the actual tax burden on a property as a proportion of its market value, adjusted by the assessment practices in place. Therefore, it shows how effectively the tax rate applies to the assessed value of properties, allowing for a clearer understanding of the real estate tax obligations that a property owner has.

The other choices do not relate to the Effective Tax Rate. Standard deviation and average absolute deviation relate to statistical measures of variability and dispersion, while EGI (Effective Gross Income) divided by operating expenses does not pertain to tax rates but rather to measuring income in relation to business expenses.