Changes

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.

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.

Consequently, 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''''."