Poor States, with Low Tax Capacity, Are Forced to

question 38

Multiple Choice

Poor states, with low tax capacity, are forced to

• A)tax at a lower rate than wealthy states because there is less demand for basic services.
• B)tax at the same rate as wealthy states because tax capacity is not related to tax effort.
• C)exert less tax effort than wealthy states.
• D)tax at high rates just to pull in enough money to pay for basic governmental functions.

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