Income Taxation: Laws, Principles, and Applications

These flashcards cover key concepts regarding income taxation as outlined in the lecture notes.

Taxation

The inherent power of the state to impose a financial charge for public purposes.

Gross Income

Total income before any deductions or exemptions, as defined under tax laws.

Final Income Taxation

Tax applied to certain types of income at a set rate as opposed to progressive rates.

Capital Gains Tax

A tax on the profit made from selling certain types of assets.

Fringe Benefits Tax

A tax imposed on certain non-cash benefits provided by an employer to an employee.

Deductions

Expenses that can be subtracted from gross income to reduce taxable income.

Tax Exemption

Exemption from certain taxes for specific entities such as charities or non-profits.

Double Taxation

The taxation of the same income or financial transaction in more than one jurisdiction.

Tax Evasion

Illegal act of not paying taxes owed to the government.

Tax Avoidance

Legal methods to minimize tax liabilities through various strategies.

Ability to Pay Theory

Taxation principle that suggests taxes should be based on an individual’s capacity to pay.

Benefit Received Theory

Principle that claims those who benefit more from government should pay more in taxes.

Progressive Tax System

A tax system where the tax rate increases as the taxable amount increases.

Uniformity Rule

The principle that taxes must be fair and apply equally across similar circumstances.

Territoriality

The principle that taxes apply based on where the income or transaction is located.

Situs of Taxation

The jurisdictional aspect determining where taxes can be levied.

Police Power

The power of the state to enact laws to protect the welfare and safety of the public.

Eminent Domain

The right of the government to take private property for public use, with compensation.

Lifeblood Doctrine

The principle that taxes are essential to the existence and operation of government.

Tax Amnesty

A government program that allows taxpayers to pay taxes owed without penalties.

Non-Delegation of Taxing Power

The principle that the authority to tax cannot be transferred from the legislature.