Question

Write a detailed note on the following:

Personal Income

Answer 1

Personal Income refers to the total income actually received by individuals and households from all sources,whether from productive activities or as transfer payments,before the payment of direct taxes (like income tax).

It is a subset of Private Income, but unlike private income, it excludes income not actually received by individuals, such as undistributed corporate profits and corporate income taxes.

“Personal Income is the total income actually received by individuals and households from all sources, including both factor income and transfer payments, before payment of direct taxes.”

Personal Income = Private Income − Undistributed Profits − Corporate Taxes + Transfer Payments