Question

The tax based on the profits (earnings) of a business is known as:

Select one:
a. operating tax
b. sales tax
c. payroll tax
d. income tax

Answer 1

The tax based on the profits of a business is known as income tax, and for corporations, it is specifically called corporate income tax. This tax is applied to a company's net profits and is a major source of federal revenue.

Step-by-step explanation:

Specifically, when referring to a corporation or company, this is often termed corporate income tax. Unlike taxes such as sales tax which is applied to business transactions, or payroll tax which is deducted from an employee's wages, corporate income tax is applied to a company's net profits.

Many countries impose a tax on all corporations conducting business within their jurisdictions, and this tax is considered a separate entity from taxes on individual income.

Over time, corporate income tax receipts as a share of GDP have tended to decline, but they still represent a significant source of federal revenue.