Excise tax

“ We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such. ”

“ The system of excise duties has never commended itself to the favor of the American people, and has never been resorted to except for supplying deficiencies in the Treasury when, by reason of special exigencies, the duties on imports have proved inadequate for the needs of the Government. The sentiment of the country doubtless demands that the present excise tax shall be abolished as soon as such a course can be safely pursued.
It seems to me, however, that, for various reasons, so sweeping a measure as the total abolition of internal taxes would for the present be an unwise step. ”

“ It was held that the reference by the statute to the transportation receipts, and to a certain percentage of the same, in determining the amount of the excise tax, was simply to ascertain the value of the business done by the corporation, and thus obtain a guide to a reasonable conclusion as to the amount of the excise tax which should be levied. ”

“ In general, section 4944 (a) (1) imposes an excise tax on each investment which jeopardizes the exempt purposes of a private foundation. Section 4945 (a) (1) imposes an excise tax on each taxable expenditure made by such a foundation. The taxes imposed by subsections (a) (1) are to be paid by the private foundation. When there is tax imposed by a respective subsection (a) (1) , sections 4944 (a) (2) and 4945 (a) (2) may impose excise taxes on the management of the foundation as well. The subsections (a) (1) and (a) (2) taxes are defined as "first tier" excise taxes. ”

“ Title VIII, as we have said, lays two different types of tax, an 'income tax on employees,' and 'an excise tax on employers.' The income tax on employees is measured by wages paid during the calendar year. Section 801 (42 U.S.C.A. § 1001) . The excise tax on the employer is to be paid 'with respect to having individuals in his employ,' and, like the tax on employees, is measured by wages. ”

“ The difference between an excise tax based on sales and one based on use of property is obvious and substantial. If the state sees fit to tax one and not the other, there is nothing in the federal Constitution to prevent ”

“ If a State may impose an excise tax on something that gives advantage or pleasure, such as the practice of a particular profession, why is it not also a taxable advantage that is had from being able to use property that for reasons extraneous to the user is not subject to the taxing power? ”

“ If the business itself, by reason of its character, is not immune, although undertaken by the state, from a federal excise tax upon its operations, upon what ground can it be said that the compensation of those who conduct the enterprise for the state is exempt from a federal income tax? Their compensation, whether paid out of the returns from the business or otherwise, can have no quality, so far as the federal taxing power is concerned, superior to that of the enterprise in which the compensated service is rendered. ”

“ To me it seems plain that a tax imposed upon an ordinary gift, to be measured by the value of the property given and without regard to any qualifying circumstances, is a tax by indirection upon the property, as much, for example, as a tax upon the mere possession by the owner of a farm, measured by the value of the land possessed, would be a tax on the land. To call either of them an excise is to sacrifice substance to a mere form of words. ”

“ We see no reason to doubt the power of the state to select this commodity, as distinguished from others, in order to impose an excise tax upon its sale and use; and since the tax operates impartially upon all, and with territorial uniformity throughout the state, we deem it 'equal and uniform upon subjects of taxation of the same class,' within the meaning of section 1 of article 8. ”

“ There are cogent reasons, however, why the national indebtedness should not be thus rapidly extinguished. Chief among them is the fact that only by excessive taxation is such rapidity attainable.
In a communication to the Congress at its last session I recommended that all excise taxes be abolished except those relating to distilled spirits and that substantial reductions be also made in the revenues from customs. A statute has since been enacted by which the annual tax and tariff receipts of the Government have been cut down to the extent of at least fifty or sixty millions of dollars. ”

“ The tax, which is described in the statute as an excise, is laid with uniformity throughout the United States as a duty, an impost, or an excise upon the relation of employment.
1. We are told that the relation of employment is one so essential to the pursuit of happiness that it may not be burdened with a tax. Appeal is made to history. ”

“ On the one side, the proposition is that the command that duties, imposts, and excises shall be uniform throughout the United States relates to the inherent and intrinsic character of the tax; that it contemplates the operation of the tax upon the property of the individual taxpayer, and exacts that when an impost, duty, or excise is levied, it shall operate precisely in the same manner upon all individuals ”

“ An excise duty was also imposed upon income derived from any profession, trade, employment, or avocation. The tax upon persons generally was not upon their entire income, but on the excess over and above the sum of $4,000. All persons having incomes of $4,000 or under were exempt. The whole burden of the tax, it was estimated, would fall on less than two per cent of the population of the country. ”

“ We now turn to whether petitioner acted willfully and without reasonable cause.
Section 53.4945-5 (a) (2) (iv) , Foundation Excise Tax Regs., defines willful as follows: (iv) WILLFUL. -- A foundation manager's agreement to a taxable expenditure is willful if it is voluntary, conscious, and intentional. No motive to avoid the restrictions of the law or the incurrence of any tax is necessary to make an agreement willful. However, a foundation manager's agreement to a taxable expenditure is not willful if he does not know that it is a taxable expenditure. ”

“ The force of what has been said cannot be avoided by merely calling the tax an excise. If a tax falls upon the bond and lessens its proceeds, either in respect of principal or interest, it is a tax on the bond, and cannot be made something else by resort to the vocabulary or by employing some circuitous method of imposing it. ”

“ It is customary in most countries, as before named, to impose taxes on particular professions and trades or businesses, as well as on property; and whether in the shape of a license or fee, or an excise or poll-tax, or any other form, it is of little consequence when the object of the tax is legitimate, as here, and its amount reasonable. ”

“ Many, perhaps most, courts hold that a net income tax is to be classified as an excise. [7] 'The tax levied on income is not a property tax, but is a percentage laid on the amount which a man receives, irrespective of whether he spends it, wastes it, or invests it.' Featherstone v. ”

“ Petitioner argues that each section imposes an additional excise tax upon a foundation manager only when that manager refuses a request from a fellow foundation manager to remove part or all of an investment from jeopardy or to correct a taxable expenditure. ”

“ Of all excises, hearth or smoke money seems the best. It is "the easiest, and clearest, and fittest to ground a certain revenue upon." The tax must be small or it may become unbearable. If the incidence of the tax is shifted from the tenant to the landlord, the tax becomes a tax on housing.
The advantages of a proper excise are: "The natural justice that every man should pay according to what he actually enjoyeth." If it be not farmed, but regularly collected, it encourages thrift. "No man pays double or twice for the same thing, forasmuch as nothing can be spent but once." ”

“ In the May 15, 1980, Notice of Deficiency addressed to petitioner, respondent also determined that petitioner was liable for a $10,000 additional excise tax for 1977 under section 4944 (b) (2) for failure to agree to removal of a jeopardy investment. Respondent argues that petitioner is liable for the tax under section 4944 (b) (2) because he refused to agree to remove from jeopardy the $674,942 the Trust had on deposit with ABC as of December 31, 1977. Section 4944 provides, in part ”

“ It being beyond dispute, therefore, that the sum of taxation in this case was fixed almost exclusively by the gross earnings from interstate commerce, who, may I ask, can point out the distinction between taxing the gross earnings derived from interstate commerce and taxing a valuation based on such earnings? The elementary principle so often applied by the court, that a tax which may not be imposed directly cannot be levied indirectly, is decisive. ”

“ If there were any doubt as to the intention of the states to make the grant of the right to impose indirect taxes subject to the condition that such taxes shall be in all respects uniform and impartial, that doubt, as said by counsel, should be resolved in the interest of justice, in favor of the taxpayer.'
Exemptions from the operation of a tax always create inequalities. Those not exempted must, in the end, bear an additional burden or pay more than their share. ”

“ That tax is to be returned by, and collected from, the corporation as his agent and instrument.
A tax is understood to be a charge, a pecuniary burden, for the support of government. Of all burdens imposed upon mankind that of grinding taxation is the most cruel. It is not taxation that government should take from one the profits and gains of another. That is taxation which compels one to pay for the support of the government from his own gains and of his own property. ”

“ The duty of this court to examine taxing acts to see that the use of federal tax exempt subjects as a measure for taxes imposed in terms upon taxable subjects is not a cloak, under which the former in substance and effect are taxes, was never more imperative than now, when, by reason of increased and increasing public expenditures, states and municipalies are driven to search in every direction for additional sources of revenue. ”

“ This brought me to the conclusion that, “when a reduction of taxation is about to take place, it is exceedingly important that great care and judgment should be exercised in the selection of the tax to be reduced, in order that the maximum of relief may be afforded to the public with the minimum of injury to the revenue.” ”

“ This inherent limitation upon the taxing power forbids the imposition of taxes which are unequal in their operation upon similar kinds of property, and necessarily strikes down the gross and arbitrary distinctions in the income law as passed by congress. The law, as we have seen, distinguishes in the taxation between corporations by exempting the property of some of them from taxation, and levying the tax on the property of others, when the corporations do not materially differ from one another in the character of their business or in the protection required by the government. ”

“ They are, first, that incomes below a certain amount should be altogether untaxed. This minimum should not be higher than the amount which suffices for the necessaries of the existing population. The second condition is, that incomes above the limit should be taxed only in proportion to the surplus by which they exceed the limit. Thirdly, that all sums saved from income and invested should be exempt from the tax ”

“ The income-tax was originally proposed to supply the loss of revenue sustained in consequence of an over-reduction of the indirect taxes; and as a matter of equity it follows, that the supplies should be drawn, though in a different form, from the same portion of the community.
Is this the case? Can any man venture to say that the income-tax, as we have known it for the last five years, has been borne with equal [388] fairness by all classes of the community? Is it not, on the contrary, the most unequal, the most unjust, and the most oppressive tax that ever yet was levied? ”

“ The adoption of the taxing act, as recommended by the commission, may therefore be taken, as appellant contends, to evidence a definite and specific legislative purpose to levy a new type of franchise tax, measured by corporate net income, including the tax exempt income from federal and state bonds. ”

“ As we pointed out in the Merrion footnote, see n. 5, supra, a multiple taxation issue may arise when more than one State attempts to tax the same activity. If a unitary business derives income from several States, each State may only tax the portion of that income that is attributable to activity within its borders. ”

“ There is little or no uniformity among the taxation schemes of the one hundred comparatively free and sovereign states as economic and other conditions vary greatly in different sections of the continent. Every state has ten basic constitutional provisions which cannot be modified except by consent of the federal supreme court, and one of these articles prevents levying a tax of more than one per cent on the value of any property in any one year, homesites, whether in city or country, being exempted. ”

“ The exemption of interstate business from the type of State taxation here involved is now made complete.
A business engaging in activities in two or more States should bear its part of the tax burdens of each. If valid, non-discriminatory taxes imposed in these States create 'multiple' burdens, such 'burdens' result from the political subdivisions created by our form of government. They are the price paid for governmental protection and maintenance in all States where the taxpayer does business. ”