2: General Principles of Taxation

Taxation

Is a mode by which governments make exactions for revenue in order to support their existence and carry out their legitimate objectives.

Taxation (Power)

Think of taxation as the "ability" or "right" of the government to collect money from the people.

Tax (Money)

It's the "result" or "product" of the government's power of taxation.

Inherent in sovereignty

It exists apart from constitutions and without being expressly conferred by the people.

Natural Authority

Just by existing as an independent and self-governing entity, a government naturally has the authority to collect taxes from its people.

No Need for Approval

This power to tax does not require any special approval or permission from the people or any other authority. It's an automatic right that comes with being a sovereign government.

Constitution or Laws Set Limits

While the government inherently has the power to tax, the Constitution or laws may limit or regulate how this power is used. These rules ensure that taxation is done fairly, justly, and in a way that respects citizens' rights.

Essentially a legislative function

The power to tax is peculiarly and exclusively legislative and cannot be exercised by the executive or judicial branch of the government.

Legislative Function

responsible for making laws

No Executive or Judicial Role

The executive branch (like the President or government agencies) and the judicial branch (the courts) cannot create or impose taxes. They can only enforce or interpret the laws made by the legislative branch.

Subject to constitutional and inherent limitations

These limitations are those provided in the fundamental law or implied therefrom, while the rest spring from the nature of the taxing power itself although they may or may not be provided in the Constitution.

Chief Justice John Marshall

“The power to tax involves the power to destroy."

Scope of Taxation

Subject to constitutional and inherent restrictions, the power of taxation is regarded as supreme, unlimited and comprehensive.

The Subjects or Objects to Be Taxed

Lawmakers decide who or what will be taxed. This could include things like income, property, goods, or services.

The Purpose or Object of the Tax

Taxes can only be collected for a public purpose, meaning the money has to be used for something that benefits the community or country.

The Amount or Rate of the Tax

Lawmakers determine the rate or amount of the tax. This is how they decide what percentage of income or value of property will be taken as tax

The Manner, Means, and Agencies of Collection

Lawmakers decide the process for collecting taxes. This includes which government agencies are responsible for collecting taxes and the methods used to collect them.

power to destroy

"The power to tax involves the _____”

Enforced Contribution

Paying taxes isn’t optional; it’s something that the government requires. Everyone has to contribute their share whether they want to or not.

Generally Payable in the Form of Money

Taxes are usually paid with money. Instead of giving goods or services, you pay the government a certain amount of money.

Proportionate in Character

The amount of tax you pay is usually based on a fair rule or system. For example, people with higher incomes might pay more taxes, while those with lower incomes pay less

Levied on Persons, Property, Rights, Acts, Privileges, or Transactions

Taxes can be applied to different things, such as individuals (like income tax), property (like property tax), specific actions (like sales tax), or the right to do something (like a license fee).

Levied by the State Which Has Jurisdiction or Control

The government that has authority over you (like the national government or your local city government) is the one that collects taxes from you.

Levied by the Law-Making Body of the State

Only the legislative branch (like Congress or Parliament) has the power to create and impose taxes. They make the rules about who pays taxes and how much.

Levied for Public Purpose

Taxes are collected to fund services and projects that benefit everyone, like building roads, running schools, or providing healthcare