Deck 10: The Structure of Municipal Governments

Question 1

The Leviathan theory refers to

A) the idea that government spending priorities do not reflect public preferences for spending.
B) the idea that all citizens should pay equal taxes.
C) the idea that large deficits are necessary for an effective budget.
D) the idea that government spending priorities properly reflects the public's preferences for spending.

Answer 1

A

Question 2

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

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

Answer 2

B

Question 3

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.

Answer 3

B

Question 4

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

Question 5

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 6

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

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

Question 7

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

A) corruption.
B) bad judgment.
C) loans.
D) scarcity.

Question 8

The word leviathan refers to

A) the power of citizens to rise above the government.
B) government as an ever-growing, predatory giant.
C) abolishing various unpopular taxes.
D) the ability of state governments to tax multi-millionaires.

Question 9

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.

Question 10

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 11

What was the first state to adopt a sales tax?

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

Question 12

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

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

Question 13

What effect does federal funding have on state spending?

A) It seems just to replace lost state money.
B) It seems to increase state spending.
C) It seems to discourage state spending.
D) It seems to encourage people to vote against their member of Congress.

Question 14

Which is NOT an example of an exportable tax?

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

Question 15

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

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

Question 16

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 17

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 18

A fundamental trait of a sovereign government is that it has some ability to coerce citizens to

A) vote.
B) go to school.
C) pay taxes.
D) go to war.

Question 19

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 20

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 21

The largest area of direct state spending is

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

Question 22

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

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

Question 23

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 24

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 25

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 26

Which of the following statements 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 27

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 28

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 29

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 30

Which of the following statements regarding the mix of state revenues is FALSE?

A) The 50 states combined have over $1.1 trillion annual revenue.
B) Over 70 percent of all state-generated (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 of tax revenues from the general sales tax.

Question 31

The main source of revenue for local governments is the

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

Question 32

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 33

How much sales tax revenue is expected to be lost in 2012 due to online shopping?

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

Question 34

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 35

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 36

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 37

Most states earmark their lottery funds for

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

Question 38

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 50 years ago.
B) States now collect about twice as much of their overall revenues from income taxes than 50 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 39

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

A) Political opponents have re-branded 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 40

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 41

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 42

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 43

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 44

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 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

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

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

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 49

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?