Question

question 25 (multiple choice worth 4 points)
(06.05 mc)

which scenario below best shows how local taxes support the economy?

• income taxes pay for building a new state highway.
• gas taxes pay for building a federal office building.
• a special one-year tax pays for building new schools.
• income taxes go to pay for military research.

Explanation:

Analyze the levels of taxation

Using the State vs Federal Taxation knowledge point

• Income taxes funding a state highway represents state-level taxation.
• Gas taxes funding a federal office building represents federal-level taxation.
• Income taxes funding military research represents federal-level taxation.

Identify the local taxation scenario

• Local governments (such as cities, counties, or school districts) typically levy local property taxes, sales taxes, or special short-term local taxes to fund community-specific infrastructure.
• Building local public schools is a classic responsibility of local governments, funded by local tax measures.
• Therefore, a special one-year tax paying for building new schools represents local taxes supporting the local economy.

Answer:

• (A) Income taxes pay for building a new state highway.
• (B) Gas taxes pay for building a federal office building.
• (C) A special one-year tax pays for building new schools. (Correct answer)
• (D) Income taxes go to pay for military research.