Income Tax is a tax based on which of the following?

• A. Tax based on a percentage of a person's income.
• B. Tax on property values
• C. Tax on goods and services at the point of purchase
• D. Tax on charitable donations

Answer: (A)

Income tax is a tax based on the money you earn, taken as a percentage of your income. Governments set tax rates that apply to different levels of earnings, so people with higher income often pay a larger portion of their income in tax. This is why income tax is described as a tax on income rather than on property or purchases.

Other taxes are based on different bases: property tax depends on the value of what you own, such as a home; sales tax is charged on goods and services someone buys; charitable donations aren’t taxed as a separate levy, though donations can affect your tax bill through credits or deductions.