Question 1

Most states have general sales taxes.

Accepted Answer

Most states in the US have a general sales tax that is applied to many goods and services purchased within the state. However, there are a few states that do not have a sales tax, such as Alaska, Delaware, Montana, New Hampshire, and Oregon.

Question 2

The costs for health care services in the United States have soared to more than $2 trillion annually-17 percent of the national economy and the highest of any country in the world.

Accepted Answer

The statement is true. According to the Centers for Medicare and Medicaid Services, health care spending in the United States reached $3.8 trillion in 2019, accounting for 17.7 percent of the nation's gross domestic product (GDP). This is the highest of any country in the world.

Question 3

State lotteries are a fairly recent phenomenon and came about as a response to the fiscal stress of the 1970s and 1980s.

Accepted Answer

State lotteries in the United States have a much longer history, with many dating back to the 18th and 19th centuries as a way to fund public projects. The modern wave of lotteries in the 20th century, particularly from the 1960s onwards, was indeed partly in response to fiscal needs, but the concept itself is not recent.

Question 4

Operating budgets must be balanced in all but one state but capital budgets, used for big purchases that must be paid for over time, typically run substantial deficits.

Accepted Answer

This statement is true. Most states require balanced operating budgets but allow for capital budgets to run deficits by spreading out the cost of big purchases over time.

Question 5

Most states tax individual and corporate income.

Accepted Answer

Most states in the United States have a state income tax, which is a tax on individual and corporate income. There are currently 41 states and the District of Columbia that impose a state income tax.

Question 6

Every state except Vermont is constitutionally or statutorily mandated to balance its budget each fiscal year.

Accepted Answer

This statement is true.

Question 7

When citizens want to pay for new government services by raising taxes, this is an example of the tax-service paradox.

Accepted Answer

The tax-service paradox refers to the situation where citizens demand more government services but are unwilling to pay higher taxes for them.

Question 8

Severance taxes are taxes imposed on some form of natural resources.

Accepted Answer

Severance taxes are commonly imposed on natural resources such as oil, gas, coal, timber, and minerals. These taxes are calculated based on a percentage of the value of the resources extracted, and are typically paid by the companies or individuals who extract or produce the resources. Severance taxes are often used by states and local governments to generate revenue or to compensate for the negative impacts of resource extraction on the environment or local communities.

Question 9

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

Accepted Answer

The first state to implement a personal income tax was Wisconsin in 1911. The federal government enacted its own personal income tax with the 16th Amendment in 1913.

Question 10

Revenue bonds are considered to be "full faith and credit" bonds.

Accepted Answer

Revenue bonds are not considered "full faith and credit" bonds as they are backed by a specific source of revenue, such as tolls or fees, rather than the general taxation authority of the issuer.

Question 11

Congress passed the Internet Tax Freedom Act, which placed a temporary moratorium on taxing Internet transactions.The Act remains in effect today despite intense lobbying by the states who claim they are being deprived of tax revenue.

Accepted Answer

The statement is true. The Internet Tax Freedom Act was passed in 1998 and has been renewed several times. It is still in effect today.

Question 12

Property taxes are more difficult to administer than general sales taxes.

Accepted Answer

Property taxes require assessing the value of each individual property, which can be time-consuming and complicated. Additionally, there can be disputes over the value assessment and appeals processes. General sales taxes are typically easier to administer as they are based on a percentage of transaction amounts and do not require individual assessments.

Question 13

Rainy day funds have been widely adopted by the states.

Accepted Answer

Rainy day funds or budget stabilization funds are established by many states to better manage their finances, especially during times of economic downturns or emergencies.

Question 14

User fees are increasingly being levied on "nonessential" local government services, such as parks and recreation, libraries, and airports.According to the text, the average American pays more than $1,800 a year in user fees.

Accepted Answer

According to the text, the average American pays more than $1,800 a year in user fees.

Question 15

Maine and Massachusetts operate extensive health care programs with universal coverage for those unable to afford health care insurance.

Accepted Answer

Both Maine and Massachusetts have implemented health care programs with universal coverage for those who cannot afford health insurance. Maine has "MaineCare" and Massachusetts has "MassHealth."

Question 16

Some 26 million Americans remain uninsured and they are largely dependent on government for medical services.

Accepted Answer

The uninsured population in the U.S. may not necessarily depend on government for medical services, as they might seek care through other means such as paying out-of-pocket, using community health centers, or relying on charity care.

Question 17

No legal lotteries existed in the states between 1895 and 1963.

Accepted Answer

Lotteries were banned in the United States from 1895 to 1963.

Question 18

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

Accepted Answer

Fiscal stress can indeed result from revenue shortfalls and taxation and spending restrictions, among other factors.

Question 19

State lotteries exist in the majority of states (forty-one).

Accepted Answer

According to the latest available data, state lotteries exist in forty-one states within the United States.

Question 20

In 1978, California voters passed Proposition 13, which significantly raised property taxes.

Accepted Answer

Proposition 13, passed in 1978, actually significantly reduced property taxes in California by capping them and limiting annual increases.

Quiz 12: Taxing and Spending