Guide to Financial Literacy

Question 1

5 Primary Sources of Revenue for State and Local Governments

Answer 1

1. ) Property Tax
2. ) Sales Tax
3. ) Income Tax
4. ) Intergovernmental Revenue
5. ) Other Revenue

Question 2

The amount of property taxes a jurisdiction collects is called…

Answer 2

the tax levy

Question 3

The tax levy is determined by these three factors…

Answer 3

1. ) The Tax Base
2. ) The Tax Rate
3. ) Any preferential tax treatment for certain types of taxpayers.

Question 4

Tax Rate

Answer 4

Amount of tax collected from the tax base

Question 5

Tax Levy

Answer 5

Assessed value times the tax rate

Question 6

Tax Rate

Answer 6

Percentage at which an individual or corporation is taxed

Question 7

Tax expenditures are in effect…

Answer 7

a form of spending

Question 8

Tax Preferences (sometimes called tax expenditures) are provisions in tax law…

Answer 8

that allow preferential treatment for certain taxpayers.
- They Include
1.) Credits
2.) Waivers
3.) Exemptions
4.) Deductions
5.) Differential Rates
(and anyting else that can reduce a person's or entity's tax liability)

Question 9

Regressive Tax

Answer 9

Tax in which people with lower income pay a higher percentage of their income.
a.) Sales tax is the most often discussed regressive tax.

Question 10

Revenue

Answer 10

Any inflow of cash or other financial resources.

Question 11

General Fund

Answer 11

Main operating fund for a local or state government: assets, liabilities, revenues and expenditures are recognized in the general fund unless recognized in a different fund

Question 12

Direct Cost

Answer 12

Factors that contribute exclusively to the total cost of one service.

Question 13

Indirect Cost

Answer 13

Costs that are not directly accountable to an individual service.

Question 14

Full Cost

Answer 14

Cost of a service that includes both direct and indirect costs to produce that service.

Question 15

Fixed Cost

Answer 15

Cost that does not depend on the volume of service provided

Question 16

Variable Cost

Answer 16

Cost that varies directly with the volume of service provided.

Question 17

Debt Capacity has two components

Answer 17

1. ) Debt Limits

2. ) Debt Affordability

Question 18

Debt Limits

Answer 18

are state or local laws that restrict the amount of money a jurisdiction can borrow

Question 19

Debt affordability

Answer 19

is a jurisdiction’s ability to pay down debt