2. A. Federal Limitations 1. Interstate & Foreign Commerce: denies states 2. States can’t tax fed govt 3. 14 th Amendment- limits the usage of taxes by fed govt

3. A. Every person must contribute in respect to their abilities

4. A. Sales tax: most states get 1/3 revenue from this 1. Some are exempt: food, medicine, newspapers, etc. 2. Regressive tax: not levied according to someone’s ability to pay (can’t tax on internet)

5. B. Income tax- yields another 1/3 of state’s revenues 1. progressive tax: more you make, more they take

6. C. Property tax- chief source of local gov’t income 1. On a real person 2. Personal property- cars, books, computers, etc.

7. D. Inheritance or Estate Tax – “death tax” 1. Inheritance- tax levied on heir’s portion of estate 2. estate- levied directly on full estate

8. 1. Severance Taxes: levies on removal of natural resources (timber, oil, fish, minerals, etc.) 2. Licensing & operating 3. Documentary & Stock transfer fees- recording, registering, transferring of mortgages, etc.

9.  Pay-roll taxes  Amusement taxes  Cars  Hunting  Etc.

10.  State-run liquor businesses  Toll roads  State-run lotteries  Etc.

11.  For major projects  Issue bonds

12.  State sets priorities  Governor creates an executive budget