Expert: Josh - 10/18/2005

Question
Hello:

I want to thank you for your reply; however, I am confused.

If 1000 mills equals $1.00, how can 10 mills equal $10.00 as I understand from your last reply:  "The interpretation is that 10 mills is equivalent to taxing $10 per $1000."
10 mills is equivalent to one cent, if 1000 mills equals $1.00.


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Followup To
Question -
Hello:

I want to thank you for the reply. However, I am not certain how to interpret the information indicated in (1) and (2) of my first question.
Can you explain in more detail?

I thank you for your follow-up reply.
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Followup To
Question -
Hello:

What does the following indicate or represent?

Show a tax rate of 67 mills on $1.00 as a rate on $1000.00.

1. How should the above be interpreted in order to determine the answer?

2. Does the answer represent a rate or an amount?

I thank you for any helpful reply that you may provide.
Answer -
This term is primarily used in the U.S.
12.5 mills is equivalent to taxing $12.50 per $1000.00.
Answer -
Part 1: The interpretation is that 10 mills is equivalent to taxing $10 per $1000. Accordingly, a tax rate of 67 mills is $67.00 per $1000.00.

Part 2: If you are referring to the part "$67.00 per $1000.00", strictly speaking it is a rate, because it contains the term "per" which is translated as "division".
i.e., 67/1000.

"$67.00" by itself is an amount.

Regards.

Answer
Let's be clear about this. You have been given a "tax rate", so you have to hand over $x for every dollar you earn. There are a number of ways of expressing this tax ratio. For example, the following are all equivalent.
1% tax is equivalent to 1 cent per dollar,
which is of course, equiv. to 100 cents per 100 dollars.
How you write this makes no difference to how the tax rate applies. Being quoting the tax rate in a table, certain countries prefer to express the tax rate as a nice round figure, relative to $1000. If this helps in any way.

Sure, if you consider a volume of liquid for the moment, 1000 millilitre is certainly equivalent to 1 litre. In the same way, 1000 mills (implicitly, "milli-dollar") is equivalent to 1 dollar. However, bear in mind that we are talking about a "rate" here. In the example you gave, the figure of 67 mills is quoted relative to 1000 dollars. That is how the term "mills" is understood.
As a percentage, this is equivalent to 67/1000, i.e., a tax rate of 6.7% or 0.067 if we are to avoid any ambiguity.
Personally, I dislike the usage of "mills". It doesn't make things any easier to understand. I would go back to basic maths and express the tax rate either as a percentage (6.7%) or a decimal figure 0.067 which has a universal interpretation regardless of which country you are in and what unit you use.

Getting back to my earlier example on volume. We can also express the rate of evaporation as a ratio, percentage... say, water is evaporated at a rate of 6 millilitre per litre. Here, the "6 mL" on its own represents a volume. But in the context of this statement, we must relate this relative to the 1000 mL. The evaporation rate is therefore 6/1000 or 0.6%.