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Income Income may be national income and personalincome. Whereas national income is defined as the total earned income of all thefactors of productionnamely, profits, interest, rent, wages, and othercompensation for labor, personal income may be defined as total money incomereceived by individuals before personal taxes are paid. National income does notequal GNPbecause the factors of production do notreceive payment for either capital consumption allowances or indirect businesstaxes, both of which are included in GNP. The money put aside for capitalconsumption is for replacement and thus is not counted as income. Indirect taxesinclude sales taxes, property taxes, and excise taxes that are paid bybusinesses directly to the government and so reduce the income left to pay forthe factors of production. Three-fourths of national income goes for wages,salaries, and other forms of compensation to employees. Whereasnational income shows the income that the factors of production earn, personalincome measures the income that individuals or households receive. Corporationprofits are included in national income because they are earned. Out of theseprofits, however, corporation profit taxes must be paid to government, and somemoney must be put into the business for expansion. Only that part of profitsdistributed as dividends goes to the individual; therefore, out of corporationprofits only dividends count as personal income. The factors of production earnmoney for social security and unemployment insurance contributions, but thismoney goes to government, not toindividuals. It is therefore part of national income but not part of personalincome. | 
