Final answer:
In the U.S., corporations and business owners are the primary entities that pay tax on business income. The federal government collects corporate income taxes as a major source of revenue, while business owners are taxed on income and additional employment-related taxes.
Step-by-step explanation:
Who Pays Business Taxes in the U.S.?. In the United States, corporations and business owners are the two primary entities that pay tax on business income. The federal government and state and local governments collect these taxes to generate revenue for their operations. Corporations, being separate legal entities, are subject to corporate income taxes based on their profits. These corporate income taxes are one of the third-largest sources of federal revenue. On the other hand, business owners pay taxes not only on their income but also employment tax, unemployment compensation, social security insurance, and excise tax, with some states also charging payroll taxes. The U.S. uses a progressive tax system, where the tax rate increases as an individual's or an entity's income increases.