Progressive Movement Practice Exam

Which tax reform has Congress enacted to address fair taxation of citizens?

1. High tariff

2. Property tax

3. Sales tax

4. Graduated income tax

The correct answer is: Graduated income tax

The graduated income tax is recognized as a significant tax reform enacted by Congress to promote fair taxation among citizens. This system is designed so that individuals with higher incomes pay a higher percentage in taxes compared to those with lower incomes. The principle behind this structure is that it aligns tax burdens more closely with the ability to pay, ensuring that wealthier individuals contribute a fairer share to government revenues. The graduated income tax addresses income inequality by imposing rates that increase with income levels, which helps to mitigate the financial disparities in society. This form of tax is especially instrumental in funding social programs aimed at supporting lower-income families and reducing economic inequality. In contrast, high tariffs primarily affect trade and are aimed at imported goods, which doesn't directly address citizens' income taxation. Property taxes are assessed on real estate and may not accurately reflect a taxpayer's financial state, as property ownership can vary widely among individuals. Sales taxes, while levied on consumption, are typically regressive, impacting lower-income earners disproportionately as they pay the same tax rate on purchases regardless of their income level. Thus, the graduated income tax stands out as the most equitable approach to taxation among the options.