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Test Your Fiscal Literacy With This Quiz

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Girard Miller 
September 30, 2019

Most Americans have limited knowledge of federal government finances.  The public administration community is generally more informed, but even so, most of us can use a brush-up course every now and then.  This quiz with relevant facts from my new book, Enlightened Public Finance, will help you assess your fiscal-literacy level ahead of the 2020 elections. 

  1. The Medicare trust fund will most likely be depleted in:
    1. 2022
    2. 2026
    3. 2034
    4. It was fully funded by new taxes under the ACA/Obamacare
  1. The annual federal deficit is approximately:
    1. $1 trillion
    2. Equal to the value of all real estate built in New York City in the past four centuries
    3. Equivalent to the GDP of Mexico
    4. One-fourth (1/4) of the total federal expenditure budget
    5. All of the above

  1. The least intrusive way to fully fund Social Security is to:
    1. Eliminate the FICA wage cap, now $132,900
    2. Raise payroll tax rates by 2.2 percentage points
    3. Double employer payroll taxes
    4. Raise the eligibility age to 68 for those born after 1965
    5. Cut benefits by 17 percent when the trust fund is depleted

  1. Which category of federal spending is now the largest?
    1. National defense
    2. Medicare
    3. Medicaid
    4. Interest on federal debt

  1. Which category of federal spending will be largest in ten years?
    1. National defense
    2. Medicare
    3. Medicaid
    4. Interest on federal debt
    5. Depends largely on fiscal policy in the next Presidential term(s)

  1. What percentage of Medicaid is paid by the states?
    1. About 21 percent
    2. About 38 percent
    3. Over 45 percent
    4. None of the above

  2. Medicare at Cost would eliminate insurance company profits and overhead for those who opt in, saving each participant approximately:
    1. Less than $100 annually
    2. Between $200 and $300 annually
    3. Between $400 and $500 annually
    4. Over $1000 annually

  1. The American Society of Civil Engineers estimates that the total cost to replace failing infrastructure nationwide from 2021 to 2025 would be over:
    1. $1 trillion
    2. $4 trillion
    3. $10 trillion
    4. $20 trillion

  1. The annual federal tax expenditure is approximately $125-$175 billion for:
    1. Capital gains and dividends tax preferences
    2. Employer-paid health insurance premiums
    3. Corporate tax rate reductions under TCJA 2017
    4. Tax benefits for employer defined contribution plans (401k, 403b, 457)
    5. None of the above
    6. All of the above
    7. (c) and (d) only

  1. The QBID business income tax deduction under TCJA:
    1. Was a $33 billion tax expenditure last year, $50 billion in FY 2019
    2. Puts privately held businesses at parity with C corp investors.
    3. Applies to self-employed businesses only
    4. Primarily benefits NYSE-listed public companies
    5. None of the above

  1. “Merit goods” are different from “social goods” when:
    1. They can be priced and exclusion applies
    2. Their consumption by an individual is deemed to benefit society
    3. Only the users deserve to benefit
    4. They are available to everybody at no cost
    5. None of the above

  1. “Carried interest,” is:
    1. A share of profits paid formulaically to managers of a private investment fund
    2. Subject to capital gains tax rates
    3. Not usually taxed at AMT rates
    4. Vestigial to 1600s Venetian merchant shipping
    5. All of the above
    6. (a) and (b) above

  1. A financial transactions tax:
    1. Could raise $100-$150 billion annually with manageable capital markets friction
    2. Could theoretically raise $250 billion annually, but risk impairment of the U.S. financial services industry
    3. Would discourage high frequency trading more than long-term investing
    4. Cannot be levied at a uniform tax rate as a practical matter
    5. All of the above
    6. None of the above

  1. A wealth tax would be:
    1. Difficult to administer because of invasions of privacy for fine art, bullion and jewelry.
    2. Challenged in court but not necessarily unconstitutional under the “takings” clause of the Fifth Amendment.
    3. Highly progressive if applied only to multi-millionaires
    4. All of the above
    5. None of the above

  1. Universal health care is difficult to achieve because:
    1. The current multi-payer system collects employer premiums that are difficult to replace with a uniform tax rate
    2. Giving subsidies to uninsured and underinsured citizens will invite others who now pay premiums to demand similar treatment, transferring those costs to taxpayers
    3. Medicare is already underfunded and its trust fund will soon be depleted
    4. Today’s Medicare program is not free to the elderly, as many seem to believe.
    5. A major new tax will be required; popular tax reforms alone will not generate sufficient replacement revenue
    6. All of the above
    7. None of the above
    8. Only some of the above

Answer key: 1(b), 2(e), 3(b), 4(a), 5(e), 6(b), 7(c), 8(b), 9(f), 10(a), 11(b), 12(e), 13(e), 14(d), 15(f) 

Scoring:  14-15 = Fiscally fluent; 10-13 = Fiscally literate;  and 0-9 = Fiscally fuzzy

No matter what your score, readers will find this new book on fiscal literacy to be informative and thought-provoking. https://store.bookbaby.com/book/Enlightened-Public-Finance

Author: Girard Miller received an MPA degree in 1973 from the Maxwell School at Syracuse University, and an MA in Economics from Wayne State University in 1978. Now retired, his 30 year career spanned the governmental, nonprofit and investment communities. Twice the president of national mutual funds, he served on the Governmental Accounting Standards Board, and has authored several publications for the Government Finance Officers Association, where he is an honorary life member. 

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