Exam 12: Taxing and Spending

Recessions notwithstanding, many states and localities face chronic fiscal shortfalls because of deep structural problems in their revenue systems.

In 1911, Wisconsin became the first state to implement a personal income tax, which was two years before the federal government enacted its own personal income tax.

Which type of tax would most benefit a citizen in a low-income bracket?

In 1998, Congress passed the Internet Tax Freedom Act, which placed a moratorium on taxing Internet transactions. The moratorium has now been lifted, and states are free to tax all items sold on the Internet under each state's sales tax rules.

What two basic principles describe state and local financial systems?

_____ consumes the largest proportion of total state spending.

Why have lotteries and legalized gambling gained favor in terms of sources of revenue? Describe the advantages and disadvantages of such a revenue source. Discuss and defend your position on whether states and localities should rely on such sources.

Severance taxes are popular in states that are

Setting aside fuel taxes for road and highway programs is an example of

For years, most states and many local governments have been underfunding the future liabilities of

The extent to which a jurisdiction exploits its taxable resources is known as

The use of circuit breaker legislation on property taxes is intended to

Many criteria can be used to evaluate taxes. Explain three of the most commonly agreed upon criteria. Then use the sales tax, property tax, personal income tax, and lottery to illustrate how these criteria might apply in each instance.

Which of the following is a disadvantage of state lotteries?

Taxes on _____ account for 29 percent of all local government tax revenues.

The fiscal problems facing states and local governments today are not short-term-they are systemic. Revenue systems are archaic. Some programs are underfunded, while others may have outlived their value but still hang on. Voters want services but often refuse to approve the resources necessary to pay for them. You are running for governor and writing your campaign platform on the principle of transparency and honesty. What do you say?

Fiscal stress refers to financial pressures placed on a government from factors such as revenue shortfalls and taxing, and spending limitations.

Own-source revenues refer to monies derived by a government from its own taxable resources.

Describe the current fiscal challenges to state and local financial systems. How have states and localities dealt with these challenges? Provide specific examples and comment on the future role of interdependency and diversity in financial systems as mechanisms to deal with these fiscal challenges.

There is a close relationship between state wealth (as measured by personal income) and tax effort, which can be measured by tax burden.