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What type of tax was established by the 16th amendment?

  1. Excise tax

  2. Import tax

  3. Income tax

  4. Estate tax

The correct answer is: Income tax

The 16th Amendment to the United States Constitution, ratified in 1913, specifically allows Congress to impose a federal income tax without apportioning it among the states based on population. This was a significant development in U.S. tax policy because prior to this amendment, the federal government struggled to collect adequate revenue without imposing tariff duties and other indirect taxes. The establishment of an income tax under the 16th Amendment aimed to create a more equitable tax system where individuals and entities were taxed based on their earnings, which meant that wealthier individuals could be taxed at higher rates than those who were less affluent. This progressive taxation system was intended to alleviate the financial burden on lower-income individuals and generate a stable source of revenue for the federal government. By focusing on taxing personal and corporate income, the 16th Amendment represented a shift toward a more modern economic structure, contributing to the development of the welfare state and funding essential governmental functions.