Topics: Tax, Taxation in the United States, Tax refund Pages: 6 (1683 words) Published: June 22, 2013

* It is a means by which governments finance their expenditure by imposing charges on citizens and corporate entities. * Governments use taxation to encourage or discourage certain economic decisions. For example, reduction in taxable personal (or household) income by the amount paid as interest on home mortgage loans results in greater construction activity, and generates more jobs. See also taxation principles. * Taxation refers to the act of a taxing authority actually levying tax. Taxation as a term applies to all types of taxes, from income to gift to estate taxes. It is usually referred to as an act; any revenue collected is usually called "taxes." * Taxes - the enforced proportional contributions from persons and property, levied by the State by virtue of its sovereignty, for the support of government and for all public needs.

Three Powers of the State

The Fundamental Powers of the State
3 Powers of the State

1. Police Power - power of the State to regulate liberty and property for the promotion of the general welfare. 2. Power of Eminent Domain - enables the State to forcibly acquire private property, upon payment of just compensation, for some intended public use. 3. Power of Taxation - the State is able to demand from the members of society their proportionate share or contribution in the maintenance of the Government.

* They are inherent in the state and may be exercised by it without need of express constitutional grant * They are not only necessary but indispensable. The State cannot continue or be effective unless it is able to exercise them. * They are methods by which the State interferes with private rights. * They all presuppose an equivalent compensation for the private rights interfered with. * They are exercised primarily by the legislature.


* Police Power
1. Regulates both property and liberty
2. May be exercised only by the government
3. The property taken is destroyed; Rationale – it is noxious or intended for a noxious purpose 4. Compensation: intangible altruistic feeling that he has contributed to the general welfare

* Power of Eminent Domain
1. affect only property of rights
2. may be exercised by some private entities
3. intended for a public use or purpose and is therefore wholesome 4. a full and fair equivalent of the property expropriated or protection

* Power of Taxation
1. affect only property of rights
2. may be exercised by some private entities
3. intended for a public use or purpose and is therefore wholesome 4. public improvements for the taxes paid

* “Constitutional provisions for the security of persons and property should be liberally construed.”

Limitations on the Power of Taxation
* The power of taxation is however, subject to constitutional and inherent limitations. Constitutional limitations 
* are those provided for in the constitution or implied from its provisions, while inherent limitations are restrictions to the power to tax attached to its nature. The following are the inherent limitations.

1. Purpose. Taxes may be levied only for public purpose. To levy a tax means to impose or to charge or to collect a tax from those to whom it is addressed. Technically however, to levy is to pass on laws or ordinances imposing a tax or duty upon specific group of taxpayers. Under this concept, the impelling reason for the imposition of the tax must be the welfare of the public, in general. This follows that the proceeds from such imposition shall inure to the benefit of the public. 2. Territoriality. It relates to the area of jurisdiction and responsibility of a particular estate. Independent states power of taxation is generally confined only within its jurisdiction to give due respect and as courtesy to other states. The State may tax persons and...
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