Definition
It generally applies to taxable income after allowable business expenses, deductions, and credits.
Political Dictionary
Corporate Tax
Corporate tax is a tax on corporate profits.
Why It Matters
Corporate taxes influence investment, business structure, government revenue, and international competitiveness.
How It Works
Corporations calculate taxable profit and pay tax under federal and state law.
History
Corporate taxation expanded with the growth of large firms and modern income-tax systems.
Example
A corporation deducts wages and other expenses before calculating taxable income.
Common Misconceptions
- Corporations always bear the full economic burden themselves.
- Revenue and profit are the same.
- Every business pays the corporate income tax.
Related Terms
- Fiscal Policy
- Monetary Policy
- Inflation
- Economic Growth
- Government Spending
Related Topics
See Also