Changes

EXCISE - A tax levied exclusively on goods, services, or activities which are considered ''privileged'' or ''luxurious''. Excises may not encumber “essential” items, or anything directly connected with the exercise of an unalienable right, such as the right to practice one’s religion or earn a living.  Adam Smith, whose work, Wealth of Nations, functioned as the economic bible of America’s Founding Fathers, defined “luxurious” items as those which are not necessary to sustaining life, and thus which “every man is allowed to buy or not buy as he chuses.” [Bk. V, Ch. 2, Pt. 2]  Such items are legitimate objects of excise.  On the other hand, he defined “necessary” items as those “which are indispensably necessary for the support of life,” including those which “the custom of the country renders it indecent for creditable people…to be without.”  In modern America, items which are “indecent” for “creditable people to be without" include food, clothing, housing, transportation, medicine, health care, arms for self-defense, phone service, sundries, education, etc.  These items and activities are not qualified to be taxed under an excise.

<big>'''EXCISE TAX'''</big>

 

An excise is a tax levied exclusively on goods, services, or activities which are considered ''privileged'' or ''luxurious''. Excises may not encumber “essential” items, or anything directly connected with the exercise of an unalienable right, such as the right to practice one’s religion or earn a living.  Adam Smith, whose work, Wealth of Nations, functioned as the economic bible of America’s Founding Fathers, defined “luxurious” items as those which are not necessary to sustaining life, and thus which “every man is allowed to buy or not buy as he chuses.” [Bk. V, Ch. 2, Pt. 2]  Such items are legitimate objects of excise.  On the other hand, he defined “necessary” items as those “which are indispensably necessary for the support of life,” including those which “the custom of the country renders it indecent for creditable people…to be without.”  In modern America, items which are “indecent” for “creditable people to be without" include food, clothing, housing, transportation, medicine, health care, arms for self-defense, phone service, sundries, education, etc.  These items and activities are not qualified to be taxed under an excise.

Thus, excises in the United States currently tax only certain luxury items and licensed activities, such as liquor, tobacco, luxury automobiles, aviation permits, and certain government-connected activities.

Thus, excises in the United States currently tax only certain luxury items and licensed activities, such as liquor, tobacco, luxury automobiles, aviation permits, and certain government-connected activities.

The assessment of an excise is usually (but not always) triggered by the transfer or sale of a certain commodity.  It’s important to understand, however, that an excise is defined by '''what''' it taxes -- privilege and luxury -- not by how or when it is triggered.  In 1911, the Supreme Court clarified this in Flint v. Stone Tracy Co.: "Excises are taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges... the requirement to pay such taxes involves the exercise of  ’'''privileges''''."  

The assessment of an excise is usually (but not always) triggered by the transfer or sale of a certain commodity.  It’s important to understand, however, that an excise is defined by '''what''' it taxes -- privilege and luxury -- not by how or when it is triggered.  In 1911, the Supreme Court clarified this in Flint v. Stone Tracy Co.: "Excises are taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges... the requirement to pay such taxes involves the exercise of  ’'''privileges''''."  

State and federal courts are in agreement:  

 

 

State and federal courts concur with the above definition:  

“The term ‘excise tax’ is synonymous with ‘privilege tax’, and the two have been used interchangeable.  (American Airways v. Wallace, 57 F.2d 877, 880)

“The term ‘excise tax’ is synonymous with ‘privilege tax’, and the two have been used interchangeable.  (American Airways v. Wallace, 57 F.2d 877, 880)

“An ‘excise tax’ is often used synonymous with ‘privilege’ or ‘license tax‘.”  Shannon v. Streckus Steamers, 279 Ky. 649, 131 S.W.2d 833, 838.

“An ‘excise tax’ is often used synonymous with ‘privilege’ or ‘license tax‘.”  Shannon v. Streckus Steamers, 279 Ky. 649, 131 S.W.2d 833, 838.

For example, if the “event” definition of excise were permitted, Congress could attempt to levy a tax on attending church, or issuing a news report, or going to school, because each of these is an “event.”  But the courts would likely rule such a tax unconstitutional because these “events” involve the exercise of unalienable rights, not privileges.

For example, if the “event” definition of excise were permitted, Congress could attempt to levy a tax on attending church, or issuing a news report, or going to school, because each of these is an “event.”  But the courts would likely rule such a tax unconstitutional because these “events” involve the exercise of unalienable rights, not privileges.

An excise is therefore an Indirect tax in the Constitutional sense. It is paid on a '''voluntary''' basis because it only taxes things a person does not require to sustain life or to exercise an unalienable right. Excises can thus be '''avoided''' simply by not buying the luxury item in question or participating in the privileged activity.

An excise is therefore an Indirect tax in the Constitutional sense. It is paid on a '''voluntary''' basis because it only taxes things a person does not require to sustain life or to exercise an unalienable right. Excises can thus be '''avoided''' simply by not buying the luxury item in question or participating in the privileged activity.

'''Alexander Hamilton - ''The Federalist Papers''

 

'''

<big>'''Alexander Hamilton - ''The Federalist Papers'''''

'''Excises can only be placed on objects proper for such a tax'''

'''Excises can only be placed on objects proper for such a tax'''