Question

Progressive reformers passes laws involving inheritance taxes; devised a modern national banking system; and developed government regulatory commissions. They also created a federal income tax based on _______.
a.
a flat tax.
c.
middle class income.
b.
regression.
d.
ability to pay.

Answer 1

Answer: D. Ability to pay

Explanation:

A tax simply means a financial levy that the government imposes on an economic entity.

The federal income tax is progressive. This implies that the households with higher income are expected to pay a higher rate when compared to the households with lower income who are expected to pay a lower rate of their income. Therefore, then Federal income tax is based on the ability to pay.