Final answer:
The tax based on a business's profits is known as income tax, or more specifically, corporate income tax for a company's earnings.
Step-by-step explanation:
The tax based on the profits (earnings) of a business is known as income tax, specifically corporate income tax when referring to a company's profits. While individuals pay income tax on wages or salary, companies pay corporate income taxes on the net profits they earn. This type of tax is considered crucial because it is the third-largest source of federal tax revenue, although its share of GDP has declined over the years, from about 4% in the 1960s to an average of 1% to 2% of GDP in recent decades.
The tax based on the profits (earnings) of a business is known as income tax, specifically corporate income tax when referring to a company's profits. While individuals pay income tax on wages or salary, companies pay corporate income taxes on the net profits they earn. This type of tax is considered crucial because it is the third-largest source of federal tax revenue, although its share of GDP has declined over the years, from about 4% in the 1960s to an average of 1% to 2% of GDP in recent decades.