The character of income is a factor in determining the rate at which the income is taxed.

Name: The character of income is a factor in determining the rate at which the income is taxed.
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This is true. Different kinds of income are subject to different tax rates, deductions, and exemptions. For example, wages and salaries are taxed at a higher rate than long-term capital gains, and certain types of income (such as municipal bond interest) may be tax-free altogether.

The Character of Income Is a Factor in Determining the Rate