Payment of corporate tax is not included in the national income as it is a mere transfer payment from the firm to the government. It is a part of corporate profits which already form part of national income, therefore, it should not be separately included in national income (in addition to corporate profits).

Corporate Tax is not separately added.
It is considered as a part of PROFIT which is added....

Introduction:

Corporate tax is a form of tax levied on the profits earned by companies or corporations. It is an important source of revenue for governments and plays a significant role in the overall economy. Whether or not the payment of corporate tax is included in national income depends on the context and the definition of national income used.

Inclusion in National Income:

1. Traditional Definition: According to the traditional definition of national income, corporate tax payments are not included in national income. This is because national income is calculated as the sum of all incomes earned by individuals, and corporate tax is considered a payment made by companies to the government rather than income earned by individuals.

2. Modern Definition: In the modern definition of national income, which is widely used by economists, corporate tax payments are included in national income. This is because national income is seen as a measure of the total output and income generated within an economy, and corporate tax represents a portion of the profits earned by companies.

Reasons for Inclusion:

1. Profit Distribution: Corporate tax represents a share of the profits generated by companies. Including it in national income provides a more comprehensive picture of the income distribution within an economy.

2. Government Revenue: Corporate tax payments contribute to government revenue, which is used for public expenditure and the provision of public goods and services. Including corporate tax in national income reflects the overall economic activity and the financial resources available to the government.

3. Macro Level Analysis: Including corporate tax in national income allows for a better understanding of the overall economic performance and the impact of taxation on the economy. It helps in evaluating the role of corporations in the economy and their contribution to national income.

4. International Comparisons: Including corporate tax in national income enables comparisons between different countries and their economic performance. It provides a more accurate measure of the income generated by companies and allows for meaningful comparisons of tax burdens and economic indicators.

Conclusion:

In the modern definition of national income, corporate tax payments are generally included as part of national income. This inclusion provides a more comprehensive understanding of the income distribution, government revenue, and overall economic performance. However, it is important to note that the treatment of corporate tax in national income calculations may vary depending on the specific methodology and context used.