Deck 6: Budgeting for Revenues: Transaction-Based Revenue Sources

Question 1

How many U.S. states have general sales taxes?

A) 50
B) 45
C) 25
D) 20

Answer 1

B

Question 2

Which of the following is not a general category of excise tax?

A) Unemployment
B) Luxury
C) Sumptuary
D) Benefit-based

Answer 2

A

Question 3

Demand for alcohol and tobacco products is considered by economists to be relatively:

A) selective.
B) variable.
C) elastic.
D) inelastic.

Answer 3

D

Question 4

Federal and state taxes together make up what percentage of the cost of a six-pack of beer?

A) 15%
B) 25%
C) 40%
D) 50%

Question 5

Which of the following is an example of a special-occasion user fee?

A) Public transit fares
B) Sewer charges
C) Building permit fees
D) Expressway tolls

Question 6

Which of the following is not an accurate statement about state lotteries?

A) Lottery profits tend to generate a relatively small percentage (less than 10%) of state revenues.
B) Lotteries are inexpensive to administer.
C) Lotteries are operated by every state.
D) Lotteries can be regressive.

Question 7

General sales taxes are unit taxes.

Question 8

The general sales tax is the largest own-source revenue for state governments.

Question 9

Most states include the professional services of doctors, lawyers, dry cleaners, or accountants in their sales tax base.

Question 10

Many states permit a separate local sales tax in addition to the state sales tax.

Question 11

The vertical equity implications of the sales tax are substantially dependent on the portion of an individual's income that is spent on the items subject to the sales tax.

Question 12

The overall effect of luxury excise taxes is to make the sales tax system more progressive.

Question 13

Sumptuary excise taxes are most often ad valorem taxes.

Question 14

If transit fares remain artificially low because of subsidies, then only the poor who use the system benefit.

Question 15

What are some examples of goods subject to selective sales taxes?

Question 16

Why are sales taxes considered regressive?

Question 17

What is a value-added tax?

Question 18

What is the equity principle behind benefit-based excise taxes?

Question 19

What is the equity principle behind user fees?

Question 20

Name three examples of new excise taxes that have been levied by state or local governments in the United States.

Question 21

Is the sales tax a progressive or a regressive tax? What are the policy actions that governments can take that change the vertical equity implications of the sales tax? Provide examples of the application of these policies in the United States.