3: Limitations on the Power of Taxation

Constitutional limitations

those expressly found in the constitution or implied from its provisions

Inherent limitations

those which restrict the power although they are not embodied in the Constitution

Basis

The constituional provision states: “No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws.”

Due process of law

means that a person can be deprived of life, liberty, or property by the State—but only if certain legal requirements are followed

Substantive due process

the action must be based on a valid law

Procedural due process

the process must follow fair and reasonable legal procedures

Application

applied to taxation

Uniformity within a taxing area

Taxes must be applied consistently to all subjects of the tax within the same jurisdiction

Equality in Burden

Since people and properties differ in value and use, exact eqaulity would be unreasonable. What matters is that the tax does not unfairly single out anyone.

Uniformity

means that the burden of tax should be fairly distributed, not that everyone pays exactly the same amount

valid classification

The rule of uniformity in taxation is closely tied to _____ under the equal protection principle.

equity

meaning the tax burden should be fairly shared among taxpayers

progressive tax system

one that is primarily based on a person’s ability to pay

direct taxes

like income taxes

indirect taxes

like VAT

progressive system

this refers to the entire tax structure being designed around fairness and ability to pay

Equal protection

means people in similar situations should be treated the same

uniformity and equity

address how to treat people in different circumstances in a far and reasonable way

poll tax

No person shall be imprisoned for dept or non-payment of a poll tax

license fee

The Supreme Court ruled that a ____ cannot be imposed on the distribution or sale of Bibles or religious materials by non-profit religious group if they are not selling for profit

line-item veto

this lets the President strike out certain parts while approving the rest

privity

a government can still tax people outside its territory if there is a valid relationship, called ____, between the person and the state