Political Economy Economic Systems Questions
Income tax is a form of taxation imposed by the government on individuals and businesses based on their income or profits. It is a progressive tax system, meaning that the tax rate increases as the income level rises. The purpose of income tax is to generate revenue for the government to fund public services and programs, such as education, healthcare, infrastructure, and defense. The tax is typically calculated by applying a specific tax rate to the taxable income, which is the total income minus any deductions or exemptions allowed by the tax laws. Income tax is collected through various methods, such as payroll withholding for employees, estimated tax payments for self-employed individuals, and annual tax returns.