For a corporation, income is generally measured when allowable expenses (such as the cost of salaries) and other permitted deductions (such as a measure of the depreciation of capital assets) are subtracted from the revenues (such as sales) in arriving at the amount that is subject to taxation. The state would then take a portion of that amount.

For individuals, income is measured in a similar manner. Revenue would include employment income, income generated from assets (such as a rental property), dividends received and the capital gains on the sale of an asset (such as from the sale of a house, the sale of a business or the sale of shares).

The rate of tax is often different depending on the nature of the income and the status of the entity earning the income. Some tax systems have a different tax rate for small businesses and large businesses. Some jurisidictions have a lower rate of tax for capital gains in comparison to income taxes.

Tax law is a branch of law that encompasses a number of different matters regarding how the state taxes citizens and so forth. What is interesting about tax law is how complex it is. The complexity arises as the state uses tax law as a means of social engineering. In other words, the state uses tax law to encourage certain behavior and to discourage certain other behavior.

Further, each level of government has its own revenue requirements and its own social agenda.

Taxes arise at the federal, state and local levels. Taxes are usually based on some activity or circumstance. These include in respect to net worth (wealth tax), the ownership of a home (property tax), the earning of income (income tax), the sale of property (capital gains tax), the purchase of goods or services (sales tax), switching homes (land transfer tax), movement (fuel surcharges), the storing of information (blank media tax), the transporation of goods (import taxes), the giving of goods and services (gift taxes), dying (succession tax) and having fun (sin tax on alcohol, for instance). Merely being in conflict with the state can give rise to tax (expropriation). Some jurisdictions have taxes that arise merely if one is alive, a head or capitation tax (while often behind a tax is a social agenda to reduce a particular activity, such as the case with sin taxes, we are sure that is not the case with this tax!!).

As well, taxes can depend on legal status, such as being an individual, a corporation or having a family (the additional tax burden that arises if the family decides to raise the children itself).