President Lincoln Imposes the First Federal Income Tax

Answer the following questions to check your understanding of the story.

What type of income tax was the federal government imposing?

a) A generational income tax

b) A proportional income tax

c) A progressive income tax

d) A regressive income tax

Was this first federal income tax efficient?

a) Yes, because it increased the size of the economic pie.

b) No, because it reduced the size of the economic pie.

c) Yes, because it increased the incentive to work.

d) Yes, because it ensured the economic pie was divided equally

Was this first federal income tax fair?

The first federal income tax ____________.

a) was not fair because it created inefficiency

b) was not fair by the benefits principle because no one benefits from war

c) was not fair by either the benefits principle nor the ability-to-pay principle

d) was fair by the ability-to-pay principle

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