Final answer:
The federal government does not tax interest from state obligations, leading to potential additions on state tax returns such as Oregon's for out-of-state interests. This enables states to independently manage funds for local services.
Step-by-step explanation:
The statement that the federal does not tax interest on obligations from states or their political subdivisions is true. Therefore, if you have interest from another state, you will have an addition on the Oregon return. This system allows states to benefit from local investments and offers investors a tax advantage for buying local or in-state bonds. States can thus manage their budgets independently, with tax revenue supporting various public services like road repair and education. Multiple levels of taxation allow for more tailored and responsive fiscal policies, reflecting the needs of different communities.