Deck 10: Fiscal Policy

Question 1

Which tax generates most of the revenue collected in the United States by the federal government?

A)Property tax
B)Income tax
C)Sales tax
D)Import duty

Answer 1

B

Question 2

All of the following states do not have a sales tax EXCEPT

A)Oregon.
B)New Hampshire.
C)Pennsylvania.
D)Montana.

Answer 2

C

Question 3

Which of the following is NOT true regarding the sales tax?

A)Public opinion surveys have found that state sales taxes are the most popular of all other major revenue sources.
B)The sales tax base continues to grow and become clearer over time.
C)The sales tax has two clear weaknesses: elasticity and equity.
D)For local governments,sales tax revenue can be attractive because it offers the opportunity to have visitors bear some of the tax burden.

Answer 3

B

Question 4

Taxation on the sale of goods and services is largely the domain of

A)the federal government.
B)state and local governments.
C)county governments.
D)special districts.

Question 5

Which state leads the country in terms of how much state and local tax revenues (excluding fees)are generated relative to the amount of income in the state per person?

A)Connecticut
B)Illinois
C)Nebraska
D)Florida

Question 6

One of the most noteworthy features of the sales tax is

A)its relative political acceptability.
B)its elasticity or stability as a revenue source.
C)its equity.
D)its progressivity.

Question 7

When a tax is progressive,which group pays relatively less?

A)Elderly
B)Poor
C)Youth
D)Wealthy

Question 8

Which of the following regarding the property tax is NOT true?

A)In the past,the property tax was highly regressive,but as more lower-income people own homes,the property tax has become more progressive.
B)One traditional rationale for the use of the property tax is that it taxes people who benefit the most from local public services.
C)Overall,the property tax contributes less than 2 percent of total revenue collected by state governments.
D)Property taxes are consistently rated as the most unpopular tax by Americans.

Question 9

Which state had the highest per capita tax revenue in 2012?

A)Alabama
B)Alaska
C)Arkansas
D)Arizona

Question 10

A 2009 survey found a majority of people reported they thought that were unfair.

A)vehicle taxes
B)sales taxes
C)cigarette taxes
D)federal and property taxes

Question 11

A 1 percent mill levy is the same as saying

A)the tax is $1 per $1,000 in assessed value of property.
B)energy producers must pay 1 percent of their profit into the state general revenue fund.
C)property tax is collected by the state government.
D)local governments may tax property at 1 percent of the assessed value of property.

Question 12

What was the first state to adopt a sales tax?

A)Texas
B)Florida
C)Mississippi
D)Wisconsin

Question 13

Which is NOT an example of an exportable tax?

A)Hotel Tax
B)Tourism Tax
C)Oil Tax
D)Property Tax

Question 14

Tax equity refers to

A)rules that limit how much a government can increase taxes each year.
B)determining the amount one pays in property tax based on the equity they have in their home.
C)the fairness of a tax in terms of who bears the cost of paying it.
D)the ratio between tax revenues and general expenses.

Question 15

When the fiscal crisis hit Arizona in the late 2000s,the state did all of the following to help balance the budget EXCEPT

A)used one-time federal stimulus funds and sold the state House and Senate buildings.
B)raised income taxes.
C)furloughed state employees.
D)slashed spending on social services.

Question 16

Tax equity is understood as

A)everyone paying the same amount of taxes.
B)wealthier people paying more taxes than poorer people.
C)who bears the burden of paying taxes.
D)poorer people paying more taxes than wealthy people.

Question 17

States that receive more money from the federal government

A)tend to spend less of their own funds for public services.
B)also spend more of their own funds for public services.
C)are more likely to have their own tax revolts.
D)increases the likelihood that people will vote against their member of Congress.

Question 18

Which term describes the type of tax that places the greatest burden to pay by the poor?

A)Progressive
B)Retrograde
C)Regressive
D)Elastic

Question 19

Which of the following statements is NOT true?

A)States making use of an income tax tend to have the most progressive revenue systems overall.
B)Sales taxes collected by state governments tend to be more stable in times of economic downturns when compared to other taxes.
C)Inflation can drive people who get "cost of living raises" into higher tax brackets even though their real earning power does not increase.
D)Income taxes are relatively easy for governments to collect.

Question 20

Budgeting by state and local governments is an attempt to deal with

A)corruption.
B)bad judgment.
C)loans.
D)who gets what from government at whose expense.

Question 21

Which of the following items is taxed at the state and federal level,with revenue often dedicated to transportation expenses?

A)Natural Gas
B)Oil
C)Gasoline
D)Tobacco

Question 22

Which statement is TRUE regarding the mix of local revenues?

A)Local governments do not rely on charges and fees as much as state governments do.
B)Local governments' revenue packages look quite similar to those of states.
C)Local governments typically receive less than 10 percent of their revenues from the state.
D)Local governments rely more heavily on revenue transfers than states do.

Question 23

What category comprises the largest cost of public education at the local level?

A)Construction (new schools,improvements,etc. )
B)Labor (teachers,staff,etc. )
C)Student health (nurses,inoculations,etc. )
D)Transportation (busses,lawn equipment,etc. )

Question 24

Which of the following tax break gives Internet retailers a major advantage over local businesses?

A)Sales taxes
B)Property taxes
C)Sin taxes
D)Internet taxes

Question 25

Which of the following is NOT true regarding the estate tax?

A)Political opponents have rebranded the estate tax as a "death tax."
B)Estate taxes can be levied on both savings and properties that a deceased person passes on to his or her heirs.
C)Critics argue that some estate taxes force family farms to be broken up upon the death of a property owner.
D)Nearly everyone who inherits money must pay an estate tax due to federal laws.

Question 26

Some of the services provided by state and local governments that are funded by direct charges to the people who use the services are known as

A)indirect taxes.
B)user fees.
C)client bills.
D)public burdens.

Question 27

The largest and fastest growing component of state budgets centers on

A)transportation.
B)social service spending.
C)public employee pensions.
D)public works.

Question 28

Most states earmark their lottery funds for

A)transportation.
B)education.
C)welfare.
D)health care.

Question 29

Budget battles in the legislature,or between the legislature and the governor,largely center on

A)who has the power to collect funds.
B)what should be done with general fund revenues.
C)abolishing various unpopular taxes.
D)how to spend money on members' pet projects during the fiscal year.

Question 30

A tax that is designed to target behavior that is deemed by lawmakers as morally unworthy is known as a

A)regressive tax.
B)sin tax.
C)discouragement tax.
D)preventative tax.

Question 31

Because property taxes are usually collected on a single bill or two bills that arrive six months apart,taxpayers are likely

A)to default on their property taxes.
B)to be highly attentive to the total dollar amount they pay in property taxes.
C)refuse to pay their property taxes.
D)less attentive to them,as opposed to sales taxes.

Question 32

The main source of revenue for local governments is the

A)sales tax.
B)income tax.
C)property tax.
D)intangibles tax.

Question 33

Which of the following is NOT true regarding trends in state and local revenues?

A)Federal revenues sent to the states play a larger role in state budgets than 60 years ago.
B)States now collect about twice as much of their overall revenues from income taxes than 60 years ago.
C)States have not been as reliant on fees and charges to fill out their revenue portfolios since the 1980s.
D)A much smaller proportion of state revenue is now generated by selective sales taxes on gasoline.

Question 34

The largest area of direct state spending is

A)social services.
B)transportation.
C)education.
D)public employee pensions.

Question 35

Which tax is levied additionally at a per unit cost onto items such as alcohol,tobacco,and fuel?

A)Intangibles tax
B)Sin tax
C)Sales tax
D)Excise tax

Question 36

Which statement regarding the mix of state revenues is FALSE?

A)The 50 states combined had over $1.6 trillion annual revenue in 2011.
B)Over 70 percent of all state­generated (or "own source")revenues come from taxation.
C)Most revenue from direct charges for public services is in the form of tuition for higher education.
D)With few exceptions,states generate nearly all of their tax revenues from the general sales tax.

Question 37

How much sales tax revenue did states lose in 2012 due to online shopping?

A)$5 billion
B)$15 billion
C)$23 billion
D)$38 billion

Question 38

As of 2011,which state taxed the most on cigarettes,at $4.35 per pack?

A)Illinois
B)West Virginia
C)North Carolina
D)New York

Question 39

Which of the following is NOT true regarding changes in taxation?

A)Factors increasing the need for more revenue also increase the likelihood that a government might adopt a new tax or raise an old one.
B)Politicians often will wait until after an election year to raise unpopular taxes.
C)Politicians are most likely to increase taxes when the political costs are the highest.
D)Fiscal hardship is the most important motivation for a state to adopt new taxes.

Question 40

Which of the following taxes has the greatest possibility of discouraging entrepreneurial activity and economic growth?

A)Sales tax
B)Income tax
C)Property tax
D)Sin tax

Question 41

How do local revenue mixes differ from state revenue mixes? What are the different key revenue sources for each of these? How does the state and local revenue mixture of your state measure up with others?

Question 42

Which type of state budget can be used to finance investments in roads,bridges,buildings,and other infrastructure?

A)Capital budget
B)Standing budget
C)Balanced budget
D)Operating budget

Question 43

On average,which area of spending represents the largest part in a state's capital budgets?

A)Ports and harbors
B)Transportation infrastructure
C)Retirement homes
D)New and renovated schools

Question 44

How does state income tax factor into a state's revenue mix? What are the benefits and critiques of state income taxes? How does your state's income tax policy compare to that of other states?

Question 45

What are the positive and negative effects of state tax and expenditure limits? Do TELs work? How does your state differ from others with respect to TELs?

Question 46

Which of the following is TRUE regarding aid to the poor?

A)Assistance to the poor works in a dissimilar manner as medical benefit programs to the poor.
B)Cash assistance to the poor represents a much lower proportion of state spending on social services than health care.
C)In 1996,Congress passed a block grant program that shifted much of the responsibility for welfare assistance programs from state governments to the national government.
D)The Temporary Assistance to Needy Families program represented an expansion of total welfare benefits.

Question 47

Which of the following is NOT true regarding budgeting rules?

A)Some balanced budget rules have weak provisions for enforcement.
B)Tough budgeting rules do not prevent deficits when they are combined with limits on government borrowing.
C)Rules that simply require a budget to be balanced may be less effective than rules that require a budget to be balanced at the end of the fiscal year.
D)Some budgeting rules regulating long-term capital borrowing do not necessarily lead to less state indebtedness.

Question 48

What factors have fueled the continual popular rebellion against property taxes? What reforms,if any,at the state and local level have resulted from these popular protests?

Question 49

How do Internet sales influence state and local sales tax collection? Provide examples of how state law differs across the states,including your own.