NOTES IN TAXATION

Topics: Tax, Taxation in the United States, Property Pages: 5 (1696 words) Published: March 8, 2015
NOTES IN TAXATION

Taxation- process or means by which the sovereign, through its lawmaking body, raises income to defray necessary expenses of the government; power of the State, inherent in sovereignty -indispensable and inevitable price for civilized society, without taxes, government would be paralyzed. Taxes- lifeblood of the government and their prompt and certain availability are an imperious need. Objectives of Taxation:

Shifting wealth from the rich to the poor
Maintaining price stability
Stimulating economic growth
Encouraging full employment
State Powers:
Taxation- power of the state by which the sovereign raises revenue to defray the necessary expenses of the government. Eminent Domain- the power of the State to take private property for public use upon payment of just compensation. Police power- the power of the State to enact laws to promote public health, public morals, public safety and the general welfare of the people. Aspects of Taxation:

Levying of the tax- requires legislative function
Collection of the tax levied- administrative function
Basic Principles of a Sound Tax System
a. Fiscal adequacy- sources of revenue are sufficient to meet government expenditures. b. Equality or theoretic justice- tax imposed must be proportionate to taxpayer’s ability to pay. c. Administrative feasibility- the law must be capable of convenient, just and effective administration. Limitations on the power of Taxation:

Constitutional limitations- provided for in the Constitution or implied from its provision. Inherent limitations- are restrictions to the power to tax attached to its nature.

INHERENT LIMITATIONS:
Purpose- taxes may be levied only for public purpose
Territoriality- the State may tax persons and properties under its jurisdiction. International comity- the property of a foreign State may not be taxed by another. Exemption- governmental agencies performing governmental functions are exempt from taxation. Non-delegation- the power to tax being legislative in nature may not be delegated. DOUBLE TAXATION

Direct duplicate taxation- taxed twice when it should be taxed but once, in a fashion that both taxes are imposed for the same purpose by same taxing authority. Indirect double taxation- may not be prove unconstitutional, it is being avoided so as not to bring injustice to the taxpayer. TAXES are not subject to set-off or legal compensation under Article 1279 of the Civil Code.

Escape from Taxation:
a. Tax avoidance (Tax minimization)- when the taxpayer minimizes his tax liability by taking advantage of legally available tax planning opportunities. b. Tax evasion (Tax dodging)- when the taxpayer resorts to unlawful means to lessen or to get away with his tax liability. Situs of Taxation- place of taxation; The State may rightfully levy and collect the tax where the subject being taxed has a situs under its jurisdiction. Number of Factors:

a. Subject matter- what is being taxed maybe a person, property, an act of activity. b. Nature of tax- which tax to impose; maybe an income tax, import duty or real property tax. c. Citizenship of the taxpayer

d. Residence of the taxpayer
Situs of Taxation apply:
Persons- residence of the taxpayer
Real property or tangible personal property- location of the property Intangible personal property- situs is the domicile of the owner unless he has acquired a situs elsewhere. Income- taxpayer’s residence or citizenship, or place where the income was earned. Business, occupation and transaction- place where business is being operated, occupation being practiced and transaction completed. Gratuitous transfer of property- taxpayer’s residence or citizenship, or location of the property. Characteristics of Tax:

An enforced contribution
Levied by the lawmaking body
Proportionate in character
Generally payable in money
Imposed for the purpose of raising revenues
Be used for public purpose
CLASSIFICATION OF TAXES:
As to subject matter or...
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