Quiz 3

Question 1

Education is classified as a public good; it should be made
available to all citizens of a country, regardless of their
degree of affluence. True/False

Answer 1

True

Question 2

A public good provides a benefit to all citizens. True/False

Answer 2

True

Question 3

What is the role of the government for public good?

Answer 3

With a public good, the role of government is to raise and
distribute revenues through a system of taxation.

Question 4

A single tax can never be fair for all citizens of a taxing
unit. True/False

Answer 4

True

Question 5

Taxation theory requires diversification with a broad tax
base. True/False

Answer 5

True

Question 6

Securing revenue for government programs and services
involves raising taxes True/False

Answer 6

True

Question 7

Taxes are a function of three variables

Answer 7

Tax base
The tax rate
The tax yield

Question 8

Tax base x Tax rate =

Answer 8

Tax yield

Question 9

What is tax base?

Answer 9

The taxable value of the items or objects being
taxed; the major tax bases include property, income, sales
and privilege.

Question 10

What is tax rate?

Answer 10

The tax price applied to the base or item being
taxed.

Question 11

What is tax yield?

Answer 11

The levy or amount of revenue that is raised
from taxing.

Question 12

Tax equity?

Answer 12

A good tax system distributes the burden it creates among
citizens in an equitable manner.

The notion of equity incorporates horizontal and vertical
dimensions.

Question 13

Horizontal Equity

Answer 13

Taxpayers in similar circumstances
should be treated equally.

Question 14

Vertical Equity

Answer 14

Taxpayers in different circumstances should
be treated according to those differences.

Question 15

What two principles have been used to guide
deliberations concerning tax burdens?

Answer 15

Ability to pay
Benefits received

Question 16

What is ability to pay?

Answer 16

The foundation of most tax systems, this principle
considers capacity to pay; those taxpayers with greater capacity
contribute more, while those with lower ability to pay contribute
less. The key question with this principle is how to determine
ability to pay: wealth, consumption or income.

Question 17

What is benefits received?

Answer 17

Those individuals who use more public
services would pay more taxes; this principle has limited
applicability.

Question 18

Many taxing unit has produced a taxing program that meets
universal acceptance. True/False

Answer 18

False, No!

Question 19

What principles and theories are generally
accepted as appropriate characteristics of a viable tax
system?

Answer 19

Economic efficiency
Administrative simplicity
Flexibility
Political responsibility
Fairness

Question 20

What are principal taxes used to transfer funds to the
public sector?

Answer 20

property tax
severance tax
personal income tax
corporate tax
sales tax
privilege tax
excise tax

Question 21

Most states still use what as their most reliable and lucrative sources of revenue?

Answer 21

income tax
sales tax
property tax

Question 22

A combination of these state and local taxes defines the
overall tax burden of an individual. True/False

Answer 22

True

Question 23

Income taxes represent the smallest portion of revenue collected
by the federal government. True/False

Answer 23

False, Largest!

Question 24

Income taxes are also collected in all but 5 states. True/False

Answer 24

False, 9!

Question 25

Income tax is a progressive tax levied on income earned during a one year period, including taxes on personal and corporate incomes. True/False

Answer 25

True

Question 26

The federal income tax is considered regressive?

Answer 26

False, progressive!

Question 27

Forty-four states levy corporate income taxes; corporate tax incomes vary considerably across states. * Individual income taxes treat equals equally (horizontal equity), and those with different incomes are treated differently (vertical equity) True/False

Answer 27

True

Question 28

A sales tax is a levy imposed on the selling price of certain goods and services. True/False

Answer 28

True

Question 29

Sales tax generally?

Answer 29

It is generally applied at the retail level rather than on wholesale operations.

Question 30

Sales tax most often?

Answer 30

The sales tax is most often used at the state level of government. * It produces large amounts of revenue and is transparent.

Question 31

There is great diversity in the approaches taken by states in applying sales taxes to various commodities and by percentage. * Sales taxes compromise equity in that equals can be treated unequally.

Answer 31

True/False

Question 32

A property tax is levied against the owner of real or personal property for individuals or businesses. True/False

Answer 32

True

Question 33

The property tax is not the primary source of local revenue for public education. True/False

Answer 33

False, is!

Question 34

What are many criticisms of property taxes?

Answer 34

unequal assessment practices lack of relationship to net ownership unequal tax bases per pupil educated lack of a direct relationship between the taxes owed and the amount of income of the person or household being taxed

Question 35

Taxpayer resistance to property taxes has decreased greatly in recent decades. True/False

Answer 35

False, increased!

Question 36

Circuit breakers and homestead exemptions are designed to protect certain classes of individuals from excessive property tax burdens and to lessen regressive features of the property tax. True/False

Answer 36

True

Question 37

What is a circuit breaker exemption?

Answer 37

Designed to ensure that the property taxes of people with low incomes will not exceed a stated portion or percentage of their annual incomes, regardless of the value of their property.

Question 38

What is a Homestead exemptions?

Answer 38

Reduce property taxes by lowering the assessed value of the principal residence, used in more than 40 states.

Question 39

What is an excise tax?

Answer 39

An excise tax, also called a sumptuary tax, is sometimes imposed with the primary purpose of helping to regulate or control a certain activity or practice not deemed to be in the public interest. * Tobacco and alcohol are examples of items taxed in this way.

Question 40

What is a severance tax?

Answer 40

Severance taxes are taxes on the extraction of natural resources, including oil, natural gas and coal. * Revenue from severance taxes is volatile because it is sensitive to the price of natural resources.

Question 41

What are the potential new taxes?

Answer 41

E-Commerceand Internet Sales: 31 of the 45 states that have a sales tax have expanded sales taxes to include a tax on internet sales. Sales and Excise Taxes on Marijuana: Colorado’s tax on the sale of marijuana includes a 15 percent excise tax dedicated to education. Value-Added Tax (VAT): A tax on the value of goods at each transaction level, production to consumption.

Question 42

Other sources of funding?

Answer 42

Lotteries: Lotteries have been a source of revenue for states for about 50 years; in most states, lottery contributions to state treasuries are less than 2 percent. Private Foundations: Some districts have established private foundations for the purpose of raising funds for local school districts; this is a relatively new concept, and California is one of the leaders in this type of funding. School-Business Partnerships: Partnerships can vary greatly in scope and can include a focus on special services, professional development, management, systemic educational improvement and policy.

Question 43

The original 17 colonies had already established their own patterns of school organization and had recognized and accepted their own individual obligations for education by action and legislation during the colonial period. True/False

Answer 43

False, 13!

Question 44

According to Thomas Jefferson, education was the vehicle to ensure the survival of the republic? True/False

Answer 44

True

Question 45

The role of education in ensuring rights to the citizenry has been part of the national political discourse since the founding of the republic. True/False

Answer 45

True

Question 46

While the word “education” is absent from the U.S. Constitution, each state’s constitution requires the state legislature to establish and fund a system of public education wherein all children may receive an education. States are the entities primarily responsible for the maintenance and operation of public schools in the U.S. True/False

Answer 46

True

Question 47

Decentralized School Systems

Answer 47

State school systems developed from local units. The patterns of education in the U.S. are the products of more than 200 years of development, which was often erratic.

Question 48

Development of School Finance Policies

Answer 48

n early colonial history, land grants for the establishment and support of schools were common; the states relied to a great extent on land grants to supply school funds until the end of the 19th century. *By 1890, all the states then in the Union had tax-supported public educational systems.

Question 49

The development of public school finance theory and practice can be divided into seven stages or periods. * The periods overlap, and no specific dates divide them.

Answer 49

1. emphasis on local responsibility 2. Early grants/allocations 3. Emergence of the foundations program concept 4. Refinement of the foundations program concept 5. The power of equalization 6. Shift of emphasis and influence and special needs funding 7. A focus on adequacy

Question 50

According to the National Conference of State Legislatures, a sound state system of education has the following characteristics

Answer 50

Equity for students/tax payers Efficient makes the best possible use of resources Provision of adequate resources to local districts to achieve goals Fiscal accountability Promotion of predictability/accountability of revenues/expenditures overtime Support of student learning

Question 51

State Programs: Variations

Answer 51

Each state has a unique system for distributing revenues in support of education that is guided by the state constitution and corresponding laws and regulations. While some commonalities exist, there are many variations of finance programs among the states, and changes occur often. Commonalities include a basic or foundation program, a relationship between state and local contributions and utilization of the categorical funding method.

Question 52

State Ability to Support Education

Answer 52

Measurement of a state’s ability to support education is difficult, and the ability of the states to support education varies greatly, regardless of the criteria or devices used in measurement. The most common method currently used to compare the financial ability of states to support education requires the inclusion of income.