Chapter 22: Problem 7

Which of the following statements is true? a. The most important source of tax revenue for the federal government is individual income taxes. b. The most important source of tax revenue for state and local governments is sales taxes. c. The second most important source of revenue for state and local governments is local property taxes. d. The taxation burden, measured by taxes as a percentage of GDP, is lighter in the United States than in most other advanced industrial countries. e. All of the above are true.

Short Answer

Expert verified

True statements: a, b, c, and d. The correct option is thus e. All of the above are true.

Step by step solution

Evaluate Statement a

This statement asserts that the most important source of tax revenue for the federal government is individual income taxes. To verify this, you could consult a reputable source such as the Office of Management and Budget or look up recent data on federal government tax revenue. If individual income taxes constitute the largest portion of federal tax revenue, then Statement a is true.

Evaluate Statement b

Statement b contends that the most important source of tax revenue for state and local governments is sales taxes. To assess the accuracy of this statement, you could consult a source such as the Tax Policy Center. If sales taxes make up the largest portion of tax revenues for state and local governments, then Statement b is true.

Evaluate Statement c

Statement c claims that the second most important source of revenue for state and local governments is local property taxes. Again, consult a reliable source like the Tax Policy Center, and if local property taxes constitute the second largest portion of state and local government tax revenues, then Statement c is true.

Evaluate Statement d

Statement d asserts that the taxation burden, measured by taxes as a percentage of GDP, is lighter in the United States than in most other advanced industrial countries. To confirm this, you could compare the ratio of taxes to GDP in the United States to that of other advanced industrial countries such as those in the European Union or the G7. If the U.S. taxation burden is lower, then Statement d is true.

Determine the True Statement(s)

If all statements (a, b, c, and d) are true, then choose option e. All of the above are true. Otherwise, select the statement(s) that you found to be true based on your research.

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