Final answer:
The claim that the Confederacy established the first income tax in 1863 is incorrect. The Union Congress introduced the first federal income tax in 1862 to fund the Civil War, while the Confederate Congress initiated different tax measures, such as a tax-in-kind on agricultural produce.
Step-by-step explanation:
The statement that the Confederacy instituted the first income tax in 1863 is false. It was actually the Union Congress that enacted the nation's first income tax during the American Civil War. The Confederate Congress, on the other hand, primarily enacted a direct tax on personal property and, in 1863, approved a comprehensive tax program that included a tax-in-kind on agricultural produce. However, the income tax, as we understand it today, was put into law by the Union Congress with the Internal Revenue Act of 1862, not the Confederacy.
The Confederates faced a shortage of funds during the war and attempted various measures to raise revenue, including a tariff in 1861 which was largely ineffective due to the decline in international trade. The subsequent taxes, including the tax-in-kind where farmers had to give 10 percent of their harvest to the government, caused significant discontent among the southern population. In contrast, the Union's income tax was more successful as a revenue measure, with a structure that was progressive based on the taxpayer's earnings, signaling the first time the federal government levied an income tax on its citizens.\
Answer: False