Progressive Movement Practice Exam

Supporters of a graduated national income tax believed it was fair because:

1. The rate of taxation was the same for all persons

2. The rate of taxation increased as incomes rose

3. Income tax provided the most revenue for the government

4. Income tax replaced state and local government taxes

The correct answer is: The rate of taxation increased as incomes rose

The belief that a graduated national income tax was fair stems from the principle that individuals should contribute to government funding in a manner that corresponds to their ability to pay. In this structure, the rate of taxation increases as incomes rise, meaning that higher earners pay a larger percentage of their income compared to those with lower earnings. This system aims to reduce income inequality and ensure that those who can afford to contribute more do so, supporting essential government services and social programs that benefit society as a whole. The focus on the relationship between income levels and tax rates highlights the intention behind a graduated income tax – promoting equity in the tax system. This is fundamentally different from systems where tax rates are uniform, which do not take individual financial circumstances into account. Other options do not capture this core concept of fairness based on the taxpayer's financial capacity.