NationMaster - Encyclopedia: Direct taxation

The term direct tax has more than one meaning: a colloquial meaning and, in the United States, a constitutional law meaning. Certain taxes may be direct taxes in the colloquial sense but indirect taxes in the constitutional sense. A tax (also known as a duty) is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (e. ...

In the colloquial sense, a direct tax is one paid directly to the government by the persons (legal or natural) on whom it is imposed (often accompanied by a tax return filed by the taxpayer). Examples include some income taxes, some corporate taxes, and transfer taxes such as estate (inheritance) tax and gift tax. In this sense, a direct tax is contrasted with an indirect tax or "collected" tax (such as sales tax or value added tax (VAT)); a "collected" tax is one which is collected by intermediaries who turn over the proceeds to the government and file the related tax return. A legal entity or artificial person is a legal construct with legal rights or duties such as the legal capacity to enter into contracts and sue or be sued. ... In jurisprudence, a natural person is a human being perceptible through the senses and subject to physical laws, as opposed to an artificial person, i. ... The examples and perspective in this article or section may not represent a worldwide view. ... Corporate tax refers to direct taxes charged by various jurisdictions on the profits made by companies or associations. ... A transfer tax is a direct tax that is paid when title to property is transferred. ... An indirect tax (such as sales tax, value added tax (VAT), or goods and services tax (GST)) is collected from the person who bears the tax by intermediaries and the proceeds passed on to government. ... A sales tax is a tax on consumption. ... Value added tax (VAT) is similar to a sales tax in that it is levied at the time of the sale of goods and services. ...

In the United States, the term "direct tax" has a different meaning for the purposes of constitutional law. Traditionally a direct tax in the constitutional sense means a tax on property "by reason of its ownership" as well as a capitation (a "head tax"). In the late 1800s, U.S. courts also began to treat an income tax on income from property as a direct tax.

In this U.S. constitutional law sense, an "indirect tax," or "excise," is an "event" tax. In this sense, a transfer tax (such as gift tax and estate tax) is an indirect tax. Income taxes on income from personal services such as wages are also indirect taxes in this sense. The term excise has more than one legal meaning. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ... Inheritance tax, also known in some countries outside the United States as a death duty and referred to as an estate tax within the U.S, is a form of tax levied upon the bequest that a person may make in their will to a living person or organisation. ...

In the United States, Article I, Section 9 of the constitution requires that direct taxes imposed by the national government be apportioned among the states on the basis of population; this provision made it difficult for Congress to impose a national income tax that applied to all forms of income until the 16th Amendment was ratified in 1913. After the Sixteenth Amendment, no Federal income taxes are required to be apportioned, regardless of whether they are direct taxes (taxes on income from property) or indirect taxes (all other income taxes). Wikisource has original text related to this article: Article One of the United States Constitution Article One of the United States Constitution establishes the legislative branch of the United States government, known as the Congress, which includes the House of Representatives and the Senate. ... Congress in Joint Session. ... The examples and perspective in this article or section may not represent a worldwide view. ... Amendment XVI (the Sixteenth Amendment) of the United States Constitution, authorizing income taxes in their present form, was ratified on February 3, 1913. ... 1913 (MCMXIII) was a common year starting on Wednesday. ...

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