Income Tax Definition Economics

Individuals most often earn income through wages.

Income tax definition economics. Income tax is a tax that governments impose on income generated by businesses and individuals within their jurisdiction. This means that the marginal rate of tax rises at certain boundaries of taxable income. There are three tax rates 20 40 and 45. To meet their expenses government need income called revenue which it raises through taxes.

Taxation refers to the act of levying or imposing a tax by a taxing authority. Throughout history every organized society had some form of government. Income tax is progressive. Taxes in the u s.

Like many nations the united states has a progressive tax system not a regressive one through which a higher percentage of tax revenues are collected from high income. In free societies the goals of government have been to protect individual freedoms and to promote the well being of society as a whole. Income tax is a direct tax and it is the biggest source of revenue for the uk government each year.