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Encyclopedia > Excise tax in the United States
Taxation in the United States

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Federal taxation
Internal Revenue Service
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Income tax  ·  Payroll tax
Alternative Minimum Tax
Estate tax  ·  Excise tax
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Excise tax, sometimes called an excise duty, is a type of tax. In the United States, the term excise means: (A) any tax other than a property tax or capitation (i.e., an indirect tax, or excise, in the constitutional law sense), or (B) a tax that is simply called an excise in the language of the statute imposing that tax (an excise in the statutory law sense, sometimes called a miscellaneous excise). An excise under definition (A) is not necessarily the same as an excise under definition (B). Taxation in the United States is a complex system which may involve payment to at least four different levels of government. ... Seal of the Internal Revenue Service The Internal Revenue Service (IRS) is the United States federal government agency that collects taxes and enforces the internal revenue laws. ... Seal of the Internal Revenue Service Tax forms in the United States are used by taxpayers and tax-exempt organizations to report financial information to the Internal Revenue Service (IRS). ... The United States imposes an income tax on the taxable income of individuals, corporations, trusts, decedents estates and certain bankruptcy estates. ...        Alternative Minimum Tax (AMT) is a tax system that is part of the federal income tax system in the United States. ...        The estate tax in the United States is a tax imposed on the transfer of the taxable estate of a deceased person, whether such property is transferred via a will or according to the state laws of intestacy. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ...        Corporate tax in the United States is a tax on the taxable income of a C corporation or an entity taxed as a C corporation. ... A capital gains tax (abbreviated: CGT) is a tax charged on capital gains, the profit realized on the sale of an asset that was purchased at a lower price. ... Taxation in the United States is a complex system which may involve payment to at least four different levels of government. ... State income tax is an income tax in the United States that is levied by each individual state. ... A sales tax is a tax on consumption and is normally a certain percentage that is added onto the price of a good or service that is purchased. ... A use tax is a type of excise tax levied in the United States. ... State tax levels indicate both the tax burden and the services a state can afford to provide residents. ... Property tax, millage tax is an ad valorem tax that an owner of real estate or other property pays on the value of the property being taxed. ... Tax reform is the process of changing the way taxes are collected or managed by the government. ... The FairTax Book, co-authored by Neal Boortz and John Linder, was published on August 2, 2005, as a tool to increase public support for the FairTax Plan. ... A flat tax, also called a proportional tax, is a system that taxes all entities in a class (typically either citizens or corporations) at the same rate (as a proportion on income), as opposed to a graduated, or progressive, scheme. ... Tax protester arguments are a number of heterodox theories that deny that a person has a legal obligation to pay a tax for which the government has determined that person is liable. ... Tax protesters in the United States make a number of statutory arguments that the assessment of the income tax in the United States violates the statutes enacted by the United States Congress and signed into law by the President. ... Tax protester conspiracy arguments are arguments raised by tax protesters that assert that the imposition of the income tax in the United States is the result of some kind of illicit conspiracy. ... Image File history File links This is a lossless scalable vector image. ... Image File history File links Flag_of_Canada. ... Image File history File links Flag_of_France. ... Image File history File links Flag_of_Germany. ... Image File history File links Flag_of_Hong_Kong. ... Image File history File links Flag_of_India. ... Image File history File links Flag_of_Indonesia_(bordered). ... Image File history File links Flag_of_New_Zealand. ... Image File history File links Flag_of_Ireland. ... Image File history File links Flag_of_Russia_(bordered). ... Image File history File links Flag_of_Singapore_(bordered). ... Image File history File links Flag_of_the_United_Kingdom. ... Image File history File links No higher resolution available. ... Image File history File links European_flag. ... Wikipedia does not have an article with this exact name. ... Wiktionary (a portmanteau of wiki and dictionary) is a multilingual, Web-based project to create a free content dictionary, available in over 150 languages. ... In economics, a duty is a kind of tax, often associated with customs, a payment due to the revenue of a state, levied by force of law. ... A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). ... A poll tax, head tax, or capitation is a tax of a uniform, fixed amount per individual (as opposed to a percentage of income). ...

Contents

Constitutional law

In the U.S. constitutional law sense, an excise is essentially an event tax (as opposed to a state of being tax).


An example of a state of being tax is an ad valorem property tax (which is not an excise). A property tax may be imposed on the property or the person who owns that property at a certain moment on (for example) January 1 of each year based on the state of title at that given moment. The "state of title" (state of ownership) -- of property by reason of its ownership -- is being taxed. The next year, on January 1st, another such tax is imposed again in the same way on the same property and person, even though there has been no change in the ownership (no intervening event). The amount of the tax may change from year to year, based on the change in the value of the property or a change in the tax rate, or both, but those are separate issues governing how the tax is computed. What is being taxed, fundamentally, is the state of title -- and the state of title is a state of being, not an event. An Ad valorem tax is a tax based on the assessed value of real estate or personal property. ...


By contrast, excises are taxes on events. A realization of income (such as a receipt of wages) is an event. A sale is an event. A transfer of title by gift is an event. A transfer of title because of death is an event. Income taxes, sales taxes, and transfer taxes are all examples of event taxes. When a person receives money as income, it is not the ownership or state of title of the money itself that is taxed, but rather the fact that an income event has occurred. If the recipient takes the money and puts it under his or her bed for ten years, the income tax is not re-imposed on that money every year the money is under the bed. Only one thing is taxed by the income tax: the income event.


For purposes of the U.S. Constitution, an excise is essentially any indirect tax, or event tax. An excise means any tax other than (1) a tax on property by reason of its ownership; or (2) a capitation, or head tax.[1]


For U.S. constitutional law purposes, a duty is nominally in a separate category from an excise. However, a duty is similar to an excise in that a duty is generally imposed on an event (such as an importation) and not on a state of being.


Statutory law

The term "excise" also has a statutory law meaning. Generally, in the United States any statute that imposes a tax specifically denominated as an "excise" is an excise tax law. U.S. Federal statutory excises are (or have been) imposed under Subtitle D ("miscellaneous excise taxes") of the Internal Revenue Code, 26 U.S.C. § 4001 through 26 U.S.C. § 5000, relating to such things as luxury passenger automobiles, heavy trucks and trailers, gas guzzler vehicles, tires, petroleum products, coal, vaccines, recreational equipment, firearms (see National Firearms Act), communications services (see Telephone federal excise tax), air transportation, policies issued by foreign insurance companies, wagering, water transportation, removal of hard mineral resources from deep seabeds, chemicals, certain imported substances, non-deductible contributions to certain employer plans, and many other subjects. The Internal Revenue Code (or IRC) (more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes... The Internal Revenue Code (or IRC) (more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes... The Internal Revenue Code (or IRC) (more formally, the Internal Revenue Code of 1986, as amended) is the main body of domestic statutory tax law of the United States organized topically, including laws covering the income tax (see Income tax in the United States), payroll taxes, gift taxes, estate taxes... This article or section does not adequately cite its references or sources. ... The Telephone federal excise tax is a statutory Federal Excise Tax imposed under the Internal Revenue Code in the United States under on amounts paid for certain communications services. ...


Another example of an excise is a tax or duty levied on the sale or importation of specific goods or a fixed rate tax on the sale or importation of specific goods; in this manner it differs from a general sales tax or value added tax. A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, tribes, secessionist movements or revolutionary movements). ... Duty is a term loosely appliedDuty to any action (or course of action) whichDutyDuty is regarded as morally incumbent, apart from personal likes and dislikes or any external compulsion. ... A good in economics is any physical object (natural or man-made) or service that, upon consumption, increases utility, and therefore can be sold at a price in a market. ... A flat tax, also called a proportional tax, is a system that taxes all entities in a class (typically either citizens or corporations) at the same rate (as a proportion on income), as opposed to a graduated, or progressive, scheme. ... A sales tax is a consumption tax charged at the point of purchase for certain goods and services. ... Value added tax (VAT) is tax on exchanges. ...


Excise duties usually have one of two purposes: to raise revenue or to discourage particular behavior. Taxes such as those on sales of fuel, alcohol and tobacco are often justified on both grounds. Some economists suggest that the optimal revenue raising taxes should be levied on sales of items having an inelastic demand, while behavior altering taxes should be levied where demand is elastic. Fuel is any material that is capable of releasing energy when its chemical or physical structure is changed or converted. ... Functional group of an alcohol molecule. ... This article is about the product manufactured from Tobacco plants (Nicotiana spp. ... In economics, elasticity is the ratio of the proportional change in one variable with respect to proportional change in another variable. ...


A common example of an excise tax is the tax on sales of cigarettes: a fixed fee on each pack of cigarettes sold. The cigarette excise tax varies by state and ranges from 7 cents per pack in South Carolina to $2.46 per pack in Rhode Island. The excise tax doubles or even triples the retail cost of cigarettes in some states, but can be still avoided in many states by buying tobacco and cigarette paper separately. Official language(s) English Capital Charleston(1670-1789) Columbia(1790-present) Largest city Columbia Largest metro area Columbia Area  Ranked 40th  - Total 34,726 sq mi (82,965 km²)  - Width 200 miles (320 km)  - Length 260 miles (420 km)  - % water 6  - Latitude 32°430N to 35°12N... This article is about the U.S. State. ... This article is about the product manufactured from Tobacco plants (Nicotiana spp. ... George Washington Rolling Papers Rolling papers are small sheets, rolls, or leaves of paper which are sold for rolling ones own cigarettes either by hand or with a rolling machine. ...


A reason why the governments state that excise taxes should exist is to internalize external costs. For example, the alcohol excise tax could be used to pay for the treatment of alcohol-caused diseases. In economics external cost refers to a negative side-effect of an economic transaction, an act of exchange, consumption, or production. ...


Excise taxes can be imposed at the point of production or importation, or at the point of sale. They are usually waived or refunded on goods being exported, so as to encourage exports, though they are often re-imposed by the importing country. Smugglers will seek to obtain items at a point at which they are not taxed and then sell them at price between the pre-tax and post-tax price. They also look to find loopholes, which may exist through importing to different countries, before then exporting to the destination country. Import has a number of definitions: To import goods is to take part in International trade Import can be used as a general adjective to refer to the Import Scene in computer software, to import is to transform data into the native file format of an application that one is... These lollipops, above, were found to contain heroin when inspected by the DEA. Smuggling is illegal transport, in particular across a border. ...


For similar items, excise duties are the same for imported and domestically produced goods; if the tax is different, then there is an explicit or implicit customs duty or tariff. Customs is an authority or agency in a country responsible for collecting customs duties and for controlling the flow of animals and goods (including personal effects and hazardous items) in and out of a country. ... A tariff is a tax on foreign goods. ...


An unusual example of an excise tax is found in the State of Hawaii. In lieu of a sales tax, the State of Hawaii imposes a General Excise Tax, or GET, on all business activity in the State. The GET is charged at a rate of 4% for most businesses and 0.5% for wholesalers. The tax is imposed on all business entities, so in essence, the tax is collected at every level of production (material supplier to manufacturer to wholesaler to retailer) producing a "cascade effect" effectively adding 16-18% to the price of consumables purchased at retail. The GET is also charged on all business service activity such as real estate agent commissions, lawyer fees and the like. With Hawaii's industry heavily dependent on tourism and tourist spending, the State regularly raises nearly half its government revenues through the imposition of the General Excise Tax.


Comparison of differing definitions of "excise" under U.S. law

In the U.S. constitutional law sense, an excise includes gift taxes, estate taxes, payroll taxes, sales taxes, miscellaneous excise taxes, and income taxes on any income other than income from property, etc. -- in short, any tax that is not a direct tax.[2] In the U.S. statutory sense, however, only the "miscellaneous excise taxes" are denoted as "excises." A direct tax a tax that is collected directly by government from the persons (legal or natural) on which it is levied. ...


Commentaries on excises

Samuel Johnson's A Dictionary of the English Language defined excise in 1755 as A hateful tax levied upon commodities, and adjudged not by the common judges of property, but wretches hired by those to whom excise is paid. For other persons named Samuel Johnson, see Samuel Johnson (disambiguation). ... A Dictionary of the English Language, one of the most influential dictionaries in the history of the English language, was prepared by Samuel Johnson and published on April 15, 1755. ... 1755 was a common year starting on Wednesday (see link for calendar). ...


While presenting before the Supreme Court, Mr. Edward F. McClennen described the excise tax as follows:

"Excise," in England and in the Colonies, for at least one hundred and forty years before it was used in the Constitution, meant an inland levy on selected tangible property, or upon the owners of it, because of the activity in which the property was moving, as in the manufacture, in intermediate sale, or in the ultimate sale commonly amounting to consumption. The antithesis was the direct tax upon property in general, certainly land, when taxed on a rate fixed by its static appraised capital value, possibly when measured by its annual unwrought return in rent, income, or products, and, debatably, upon personal property so appraised or judged. Both the direct tax and the excise were preeminently property taxes, -- one regardless of its activity or inactivity, and the other taking that activity into consideration. In 1766 Dr. Johnson defined "excise" as "a hateful tax levied upon commodities, and adjudged not by the common judges of property." Dict. (3d ed., 1766). He defined "commodity" as "interest, advantage, profit, convenience of time or place, wares, merchandise." Id. "Commodity" suggests, as the principal thought, merchandise. In 1776 Adam Smith in his "The Wealth of Nations" said, "The duties of excise are imposed chiefly upon goods of home produce destined for home consumption. They are imposed only upon a few sorts of goods of the most general use." In 1780 the Massachusetts constitution indicated direct taxes to be the normal source of revenue, but gave the legislature authority to impose "reasonable duties and excises, upon any produce, goods, wares, merchandise, and commodities, whatsoever." In 1788 the Constitutional Convention of New York urged an amendment to the Constitution "That the Congress do not impose any excise on any article (ardent spirits excepted) of the growth, production, or manufacture of the United States, or any of them." 1 Elliot's Debates 72; Luther Martin said "By the power to lay excises, -- a power very odious in its nature, since it authorizes officers to go into your houses, your kitchens, your cellars, and to examine into your private concerns, -- the Congress may impose duties on every article of use or consumption, on the food that we eat, on the liquors that we drink, on the clothes that we wear, the glass which enlightens our houses, or the hearths necessary for our warmth and comfort." Cf. Chancellor Livingston in the New York Convention, 2 id. 341; Nicholas in the Virginia Convention, 3 id. 243; also 5 id. 40; Hamilton, Federalist, No. 21, p. 182; Ellsworth, Connecticut Convention, 2 Elliot 192; Writings of Gallatin, p. 73.

Notes

  1. ^ By contrast, taxes on property by reason of ownership, as well as capitations (head taxes), would be considered direct taxes in the U.S. constitutional law sense.
  2. ^ In effect, all Federal income taxes were considered excises -- in the constitutional sense -- until the 1895 U.S. Supreme Court decision in Pollock v. Farmers' Loan & Trust Co.. After Pollock, and until 1913, taxes on income from property were treated as direct taxes, while taxes on income from labor (and all other sources) continued to be considered excises. Since the ratification of the Sixteenth Amendment in 1913, all taxes on incomes, regardless of the sources of the incomes, are again treated as excises (not direct taxes) in the constitutional sense.

Holding --- Court membership Case opinions Laws applied --- Pollock v. ... Amendment XVI in the National Archives Amendment XVI (the Sixteenth Amendment) of the United States Constitution, authorizing income taxes in their present form, was ratified on February 3, 1913. ...

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