Monday, September 26, 2022

Who Has The Power To Levy Taxes

Don't Miss

Income Taxes Before The Pollock Case

law of taxation part6- Fundamental Rights and Taxation Laws, Powers of union , state to levy taxes.

Until 1913, customs duties and excise taxes were the primary sources of federal revenue. During the War of 1812, Secretary of the Treasury Alexander J. Dallas made the first public proposal for an income tax, but it was never implemented. The Congress did introduce an income tax to fund the Civil War through the Revenue Act of 1861. It levied a flat tax of three percent on annual income above $800. This act was replaced the following year with the Revenue Act of 1862, which levied a graduated tax of three to five percent on income above $600 and specified a termination of income taxation in 1866. The Civil War income taxes, which expired in 1872, proved to be both highly lucrative and drawing mostly from the more industrialized states, with New York, Pennsylvania, and Massachusetts generating about sixty percent of the total revenue that was collected. During the two decades following the expiration of the Civil War income tax, the Greenback movement, the Labor Reform Party, the Populist Party, the Democratic Party and many others called for a graduated income tax.

Before Pollock v. Farmers’ Loan & Trust Co., all income taxes had been considered to be indirect taxes imposed without respect to geography, unlike direct taxes, that have to be apportioned among the states according to population.

Constitutional Limitations On The Power To Tax

The Founders felt so strongly about the need to control government officials in their desire to get more money that they put the following restrictions on the taxing power right into the Constitution:

Article I, Section 2:

Direct taxes shall be apportioned among the several states according to their respective numbers.

Article I, Section 9:

No capitation or other direct tax shall be laid except in proportion to the census or other enumeration herein before directed to be taken.

With these limitations in mind, the Founders felt confident that future generations would be spared the heavy-handed oppression of tax collectors who would invade ones privacy and confiscate large portions of a persons property.

Other Constitutional Provisions Regarding Taxes

Article I, Section 2, Clause 3:

Representatives and direct taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers …

Article I, Section 8, Clause 1:

The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States but all Duties, Imposts and Excises shall be uniform throughout the United States.

Article I, Section 9, Clause 4:

No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken.

This clause basically refers to a tax on property, such as a tax based on the value of land, as well as a capitation.

Article I, Section 9, Clause 5:

No Tax or Duty shall be laid on Articles exported from any State.

Don’t Miss: Do You Have To Pay Taxes On Plasma Donations

A The Powers Of Congress

At its creation in 1789, the legislative branch was the most innovative.

Rule by kings and emperors was an old style of government, and the legislature in many ways represented the new. Almost certainly, the founders intended Congress to have more important powers than the President and the Supreme Court. However, they placed many checks and balances on the legislature that have prevented absolute power in the hands of one branch. Founders controlled power not only by checks from the other branches, but by creating a bicameral, or two house, Congress the Senate and the House of Representatives. The powers of Congress, then, are both constitutional and evolutionary.

Why Did The Delegates Have To Meet In Secret

Tulsa World: Broken Arrow Power Plant Claims County Has No ...

To encourage delegates to make arguments without fear of recrimination and to discourage mob action in the city, those in attendance kept their deliberations secret during their lifetimes and did not inform the public of the resulting document until September 17, after most of the delegates had signed on to it.

Also Check: How To Appeal Property Taxes Cook County

D Constitutional Amendment Claims

1. Contention: Taxpayers can refuse to pay income taxes on religious or moral grounds by invoking the First Amendment.

Some individuals or groups claim that taxpayers may refuse to pay federal income taxes based on their religious or moral beliefs or on an objection to using taxes to fund certain government programs. In support of this frivolous position, these persons mistakenly invoke the First Amendment and, often, the Religious Freedom Restoration Act .

2. Contention: IRS summonses violate the Fourth Amendment protections against search and seizure.

3. Contention: Federal income taxes constitute a taking of property without due process of law, violating the Fifth Amendment.

4. Contention: Taxpayers do not have to file returns or provide financial information because of the protection against self-incrimination found in the Fifth Amendment.

5. Contention: Compelled compliance with the federal income tax laws is a form of servitude in violation of the Thirteenth Amendment.

6. Contention: The federal income tax laws are unconstitutional because the Sixteenth Amendment to the United States Constitution was not properly ratified.

7. Contention: The Sixteenth Amendment does not authorize a direct non-apportioned federal income tax on United States citizens.

How The Us Constitution Distributes Power

Federalism and the Constitution

Constitutions are complex instruments of republican government and popular sovereignty. The way that the Texas Constitution structures and empowers government in the Lone Star State is shaped by the federal structure of powers and responsibilities outlined in the U.S. Constitution.

Scholars often speak of three types of powers identified in the U.S. Constitution:

  • Powers delegated to the Congress Article I, Section 8
  • Powers denied to the Congress and powers denied to the states Article I, Sections 9 and 10, respectively
  • Reserved powers the 10th Amendment

Additionally, the U.S. Constitution contains numerous other clauses that contribute to the interpretation of the relationship of the states to other states, to the national government, and to the people. Article IV is dedicated to addressing many of these issues.

Despite specifying this complex set of powers granted and denied to the national and state governments, the framers still felt the need to underline the generally subordinate position of the states relative to the national government in the “supremacy clause” in Article VI:

This Constitution, and the Laws of the United States which shall be made in Pursuance thereof and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.

Recommended Reading: Form 1040 State Tax Refund

Who Can Levy A Bank Account

A bank levy is a legal action taken by private creditors, the federal government and other lenders and creditors. A bank levy freezes funds in your personal bank account and allows creditors to take funds to pay off your debt. A bank levy is a tool that creditors can use to recover the funds they are owed.

Power To Levy Direct Taxes

Understanding Your Property Taxes: Part 2 – How Property Taxes Are Determined and the Mill Levy

Technically, Sections 1 and 2 of Article I of the Constitution were still under discussion. âWe have sat eight days, so little has been done,â George Nicholas complained, âthat we have hardly begun to discuss the question regularlyâ . description ends , p. 173).

Mr. Madison. Mr. ChairmanâIt was my purpose to resume before now, what I had left unfinished, concerning the necessity of a radical change of our system. The intermission which has taken place, has discontinued the progress of the argument, and has given opportunity to others to advance arguments on different parts of the plan. I hope we shall steer our course in a different manner from what we have hitherto done. I presume that vague discourses and mere sports of fancy, not relative to the subject at all, are very improper on this interesting occasion. I hope these will be no longer attempted, but that we shall come to the point. I trust we shall not go out of order, but confine ourselves to the clause under consideration. I beg gentlemen would observe this rule. I shall endeavour not to depart from it myself.

When I consider the nature of the various objections brought against this clause, I should be led to think, that the difficulties were such that gentlemen would not be able to get over them, and that the power, as defined in the plan of the convention, was impracticable. I shall trouble them with a few observations on that point.

Recommended Reading: Is Donating Plasma Taxable

Sixteenth Amendment To The United States Constitution

The Sixteenth Amendment to the United States Constitution allows Congress to levy an income tax without apportioning it among the states on the basis of population. It was passed by Congress in 1909 in response to the 1895 Supreme Court case of Pollock v. Farmers’ Loan & Trust Co. The Sixteenth Amendment was ratified by the requisite number of states on February 3, 1913, and effectively overruled the Supreme Court’s ruling in Pollock.

Prior to the early 20th century, most federal revenue came from tariffs rather than taxes, although Congress had often imposed excise taxes on various goods. The Revenue Act of 1861 had introduced the first federal income tax, but that tax was repealed in 1872. During the late nineteenth century, various groups, including the Populist Party, favored the establishment of a progressive income tax at the federal level. These groups believed that tariffs unfairly taxed the poor, and they favored using the income tax to shift the tax burden onto wealthier individuals. The 1894 WilsonGorman Tariff Act contained an income tax provision, but the tax was struck down by the Supreme Court in the case of Pollock v. Farmers’ Loan & Trust Co. In its ruling, the Supreme Court did not hold that all federal income taxes were unconstitutional, but rather held that income taxes on rents, dividends, and interest were direct taxes and thus had to be apportioned among the states on the basis of population.

Article I Of The Constitution

Section 1. All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.

Section. 2. Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of freePersons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all otherPersons

The House of Representatives shall choose their Speaker and other Officers and shall have the sole Power of Impeachment.

Section 3.chosen by the Legislature thereofand if Vacancies happen by Resignation, or otherwise, during the Recess of the Legislature of any State, the Executive thereof may make temporary Appointments until the next Meeting of the Legislature, which shall then fill such Vacancies

Judgment in Cases of Impeachment shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States: but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment and Punishment, according to Law.

Section 4.

The Congress shall assemble at least once in every Year, and such Meeting shall be on the first Monday in December , unless they shall by Law appoint a different Day.

Section 5.Section 6.

Continuance in Office.

Section 7.Section 8.

Don’t Miss: How To Find Your Employer’s Ein

Does Irs Forgive Tax Debt After 10 Years

In general, the Internal Revenue Service has 10 years to collect unpaid tax debt. After that, the debt is wiped clean from its books and the IRS writes it off. This is called the 10 Year Statute of Limitations. Therefore, many taxpayers with unpaid tax bills are unaware this statute of limitations exists.

The Power To Tax Not To Destroy: An Effects Theory Of The Taxing Clause

Municipal Utility Districts in Texas have sweeping power ...

David W. Ichel Professor of Law and Professor of Political Science at Duke Law School Director of Duke’s D.C. Summer Institute on Law and Policy

The Taxing Clause solved perhaps the single greatest collective action failure of the states under the Articles of Confederation: the serial inability of the several states to adequately fund the national government in light of free riding by sister states. See, e.g., Robert D. Cooter & Neil S. Siegel, Collective Action Federalism: A General Theory of Article I, Section 8, 63 Stanford Law Review 115 . This failure caused serious financial problems for the young, vulnerable nation and raised grave national security concerns. Where the colonists had insisted that taxation without representation was illegitimate, Americans under the Articles learned that taxation with representation was indispensable.

And so the Constitution confers upon Congress robust taxing authority. Congress was granted the power in the initial clause of Article I, Section 8, to lay and collect Taxes not just to repay the Revolutionary War debtsthe most immediate concern of the country at the timebut more broadly and prospectively to provide for the common Defence and general Welfare of the United States.

Don’t Miss: Michigan Gov Collectionseservice

Conditional Spending And Federalism

In 1987, the holding in South Dakota v. Dole reaffirmed the authority of Congress to attach conditional strings to the receipt of federal funds by state or municipal governments. In addition to the requirement that spending be for the general welfare, however, the Court devised more scrutinous criteria for determining the constitutionality of the conditions imposed:

  • First, there can be no surprises that is, the conditions for receipt must be stated clearly and the beneficiary must be aware of those conditions and their consequences.
  • Second, the conditions imposed must be related to the spending in question.
  • Last, the incentive must not be so significant as to turn cooperation into coercion.

At dispute in Dole was a condition placed on the receipt of federal highway funds: elevation of the drinking age. Any state in which persons less than 21 years of age could lawfully possess and consume alcohol would consequently lose five percent of the federal highway funds allocated by Congress. The Court found the second and last conditions met since the requirement for the funds was germane to highway safety. Additionally, the loss of only five percent of the amount was not found so substantial as to be coercive in the eyes of the Court .

In 2012, the court held for the first time in National Federation of Independent Business v. Sebelius that Congress had used its power under the spending clause in a way that was impermissibly coercive.

Fiscal Autonomy: Lgu’s Power To Create Revenues

fiscal autonomy was defined as the power to create their own sources of revenue in addition to their equitable share in the national taxes released by the national government, as well as the power to allocate their resources in accordance with their own prioritiesstrengthening of LGUs and the safeguarding of their viability and self-sufficiency through a direct grant of general and broad tax powers

1. Taxation shall be uniform in each LGU.2. Taxes, fees, charges and other impositions shall: a. be equitable and based as far as practicable on the taxpayer’s ability to pay b. be levied and collected only for public purposes c. not be unjust, excessive, oppressive, or confiscatory d. not be contrary to law, public policy, national economic policy, or in the restraint of trade.3. The collection of local taxes, fees, charges and other impositions shall in no case be let to any private person.4. The revenue collected pursuant to the provisions of the LGC shall inure solely to the benefit of, and be subject to the disposition by, the LGU levying the tax, fee, charge or other imposition unless otherwise specifically provided by the LGC.5. Each LGU shall, as far as practicable, evolve a progressive system of taxation.

Manila Electric Company v. Province of Laguna, G.R. No. 131359, May 5, 1999.

The Province of Batangas v. Romulo,G.R. No. 152774, May 27, 2004.

G.R. No. 203754, June 16, 2015.

G.R. No. 132988, July 19, 2000.

See Manila Electric Company v. Province of Laguna.

Read Also: Efstatus Taxactcom

Taxation Powers Of Union And States In India

Indian constitution has divided the taxing powers as well as the spending powers between the Union and the state governments. The subjects on which Union or State or both can levy taxes are defined in the 7th schedule of the constitution. Further, limited financial powers have been given to the local governments also as per 73rd and 74th amendments of the constitution and enshrined in Part IX and IX-A of the constitution.

Since the taxing abilities of the states are not necessarily commensurate with their spending responsibilities, some of the centres revenues need to be assigned to the state governments. On what basis this assignment should be made and on what guidelines the government should act the Constitution provides for the formation of a Finance Commission by President of India, every five years, or any such earlier period which the President deems necessary via Article 280. Based on the report of the Finance Commission, the central taxes are devolved to the state governments.

Contents

The Union government is responsible for issues that usually concern the country as a whole, for example national defence, foreign policy, railways, national highways, shipping, airways, post and telegraphs, foreign trade and banking. The state governments are responsible for other items including, law and order, agriculture, fisheries, water supply and irrigation, and public health.

Certain Taxes levied as Concurrent Powers

More articles

Popular Articles