What type of tax is levied based on income and most often used at national and state levels?

The answer is income tax, as it is a tax imposed on individuals' or entities' earnings or profits. This form of taxation is primarily employed by governments at both the national and state levels to generate revenue. Income tax is progressive in nature, meaning that individuals with higher incomes pay a larger percentage of their income in taxes compared to those with lower incomes. This structure is intended to promote equality and fairness within the tax system.

Income tax can vary significantly based on various factors such as income level, filing status, and deductions. It is an essential source of funding for public services, infrastructure, and social programs. In contrast, other tax types, such as property tax, sales tax, and excise tax, serve different purposes and are typically levied on different bases.

Property tax is based on real estate ownership, while sales tax is charged on the sale of goods and services. Excise tax is imposed on specific goods, such as gasoline or tobacco. Each of these taxes is used by governments to raise revenue, but they do so based on different criteria and are not inherently linked to the income of the taxpayer, making income tax the most appropriate choice for the question regarding taxation based on income.