How is a direct tax defined?

A direct tax is defined as a tax that is levied directly on personal or corporate income. This type of tax is typically assessed based on the taxpayer's ability to pay, meaning that individuals or corporations are responsible for paying the tax directly to the government based on their income levels. Examples of direct taxes include income tax and corporate tax.

In contrast, other types of taxes mentioned do not fit the definition of a direct tax. For instance, a tax imposed on the purchase of goods refers to indirect taxes, like sales tax or value-added tax, which are collected at the point of sale rather than directly levied on income. Similarly, while property taxes are assessed based on the value of property owned, they are classified as a specific form of tax rather than a broad category like direct taxes. Indirect taxes are also represented in the option about taxes collected indirectly through goods' pricing; such taxes are embedded in the prices consumers pay instead of being paid directly by the taxpayer to the government. Therefore, the definition focusing on income reflects the fundamental nature of what makes a tax "direct."