Social Studies Praxis Practice Test

Which level of government can impose taxes and create laws concerning commerce?

1. Only state governments

2. Only federal governments

3. Both state and federal governments

4. Local governments only

The correct answer is: Both state and federal governments

The correct choice reflects the principle of federalism in the United States, where both state and federal governments have the authority to impose taxes and create laws concerning commerce. The U.S. Constitution grants the federal government the power to regulate interstate commerce and impose taxes at the national level. This means that the federal government has specific authority over trade and economic activities that cross state lines, as well as the ability to levy taxes like income tax and tariffs. At the same time, state governments are empowered by their own constitutions to handle commerce within their borders. They have the authority to create laws that regulate businesses, impose sales taxes, and collect various local taxes. This dual system allows both levels of government to operate effectively within their jurisdictions, addressing economic needs at both the state and federal levels. The inclusion of both levels of government in the power to tax and regulate commerce demonstrates the balance of power intended by the framers of the Constitution, emphasizing that governance operates at multiple levels to best accommodate the needs of citizens.