Income Taxation Overview

Study Notes

Purpose of Taxation

The primary purpose of taxation is to raise revenue for the government to defray its expenses.
Taxation can also be used to achieve social and economic objectives, such as regulating inflation, minimizing the adverse effects of certain activities, and promoting equitable distribution of wealth.

Nature of Taxation

Taxation is an inherent power of a sovereign state, along with eminent domain and police power.
The power of taxation is legislative, meaning tax laws must be enacted before taxes can be imposed.
The power of taxation is considered plenary, subject only to constitutional and inherent limitations.

Limitations on the Power of Taxation

Taxes can only be levied for public purposes.
The government may only levy taxes on persons and properties within its jurisdiction.
The power to create tax laws rests with the Congress and cannot be delegated, except as expressly allowed by law.
Government entities are exempt from taxation due to international comity.

Constitutional Limitations on the Power of Taxation

Due process and equal protection of the laws must be upheld in taxation.
Taxes must be uniform and equitable.
The President has the power to veto tax bills.
A law granting any tax exemption requires the concurrence of the majority of the members of the Congress.
The Supreme Court has the power to make final judgments on tax cases.
Non-payment of poll tax is not punishable by imprisonment.
Religious, charitable, or educational entities, non-profit cemeteries, and churches are exempt from property taxation.
Revenues and assets of non-stock, non-profit educational institutions are exempt from taxation.

Theory and Basis of Taxation

The government has the right to compel those within its jurisdiction to pay taxes, as it provides protection and support to its people.
The benefits received principle states that taxes are used for the benefit of the public.

Description

Explore the concept of taxation, its purpose, and how it is used by governments to raise revenue and achieve social and economic objectives. Learn about the different aspects of taxation and its role in public finance.