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Which of the following statements is true? A. States are not allowed to tax personal incomes.
B. The amount of sales tax a state may charge is set by federal law.
C. A state that gives too many tax breaks may not generate enough revenue to balance the budget.
D. Only the federal government may tax corporate income.
The correct answer is C. A state that gives too many tax breaks may not generate enough revenue to balance the budget.
Explanation: While states have the authority to tax personal incomes (contradicting statement A) and can set their own sales tax rates independently of federal law (contradicting statement B), offering excessive tax breaks can lead to insufficient revenue for essential services and budget balancing. Additionally, both federal and state governments can tax corporate income (contradicting statement D).