Individual Income Taxation

The income tax is a tax imposed on the revenue or income of the corporations, business or other entities or on individuals. There are several types of incomes tax systems exist around the world with differing degrees of income tax incidence. The income taxation could be regressive, proportional or progressive. When the income tax is imposed on the revenue of the business organization, it is generally called as profit tax, corporate income tax or corporate tax. Personal income tax is generally the total income of the person (with some deductions permitted), whereas the profit tax or corporate tax often the tax net income (it is the differentiation between the expenses, additional write-offs and gross receipts).  Several systems describe income in different ways and often enable notional reductions of income like a reduction or deduction based on the number of children helped or supported.

The theory of taxing income is a modern idea or innovation and assumes many things such as reasonably accurate accounts, a money economy, a common understanding of expenses, profits and receipts and an organized society with the reliable records.

Individual income tax or taxation is also called as personal income taxes which is imposed on the total income of the persons and sometimes with some reductions are permitted.  It is generally collected on a PAYE (pay as you earn) basis with small adjustments or corrections are made after the end of the taxable year.  These corrections take on two types such as income tax refunds from the government for those who have more or overpaid and the payments to the government, for taxpayers who have not paid enough during the taxable year. Tax systems would often have reductions available that reduce the total income tax liability by deducting total taxable income. They might allow losses from one kind of income or revenue to be included against another. For instance, a loss on the stock market might be reduced against taxes paid on wages.

Questionnaire:

• What is personal or individual income taxation?
• State the difference between individual and corporate income taxation.