The income of different individuals of a country from various sources before paying the direct taxes over a period of one year is known as the personal income. Personal income will never be equal to the national income. That is, the personal incomes is not taken as the basis for the calculation of national product because in personal income some such items are included which won’t have any relation with the production. Personal incomes is obtained by subtracting undistributed profits of the corporation, tax on profit, and social securities of the employees from the national income. The reason for deducting these various amount from the n
ational income to obtain the personal income is that these amounts won’t be obtained as the personal income. Personal income is calculated by summing up the various subsidies received by the people from different sectors, interest, profit etc. that is, personal income is obtained by subtracting those amounts which are not received by the people as direct income, from the national income. Similarly, transfer payments such as unemployment allowance, old age allowance, widow allowance, etc. are included in personal income. So, personal income can be obtained by subtracting amounts received by various factors and adding transfer payment.
Personal income gives the knowledge about the purchasing power of the people and their economic welfare. But nothing is revealed about their saving. Personal income can be expressed as follows:
Personal income =NI – corporate income tax – undistributed
Corporate profits – social security contribution + transfer payments.
ational income to obtain the personal income is that these amounts won’t be obtained as the personal income. Personal income is calculated by summing up the various subsidies received by the people from different sectors, interest, profit etc. that is, personal income is obtained by subtracting those amounts which are not received by the people as direct income, from the national income. Similarly, transfer payments such as unemployment allowance, old age allowance, widow allowance, etc. are included in personal income. So, personal income can be obtained by subtracting amounts received by various factors and adding transfer payment.Personal income gives the knowledge about the purchasing power of the people and their economic welfare. But nothing is revealed about their saving. Personal income can be expressed as follows:
Personal income =NI – corporate income tax – undistributed
Corporate profits – social security contribution + transfer payments.
No comments:
Post a Comment