What tax is taken from employees based on their earnings?

Prepare for NCEA Level 2 Business Studies Test. Study comprehensively with flashcards and varied question formats, each offering hints and detailed explanations. Ready yourself for success!

Income tax is the correct answer because it is a tax levied on the earnings that an individual makes through their employment. This tax is calculated based on the total income received, which includes wages, salaries, bonuses, and other compensations. Governments use income tax as a primary source of revenue to fund public services and infrastructure.

Sales tax is not applicable in this context, as it is charged on the sale of goods and services rather than directly on an individual's earnings. Property tax pertains to taxation on real estate owned by individuals or businesses, while wealth tax targets a person's total wealth rather than their income. Therefore, income tax is specifically designed to tax the earnings of employees, making it the correct choice.

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