Taxation

• Taxation may be defined as a state power, a legislative process, and a mode of government cost distribution.
• State Power in taxation is an inherent power of the state to enforce a proportional contribution from its subjects for public purpose.
• A legislative process in taxation is a process of levying taxes by the legislature of the State to enforce proportional contributions from its subjects for public purpose.
• A mode of cost distribution in taxation is a mode by which the State allocates its costs or burden to its subjects who are benefited by its spending.
• Issuance of receipts and clearances is a function of the Internal Revenue Service.
• Assignment of internal revenue officers and other employees to other duties is a function of the Internal Revenue Service.
• Provision and distribution of forms, receipts, certificates, stamps, etc. to proper officials is a function of the Internal Revenue Service.
• Submission of annual report, pertinent information to Congress and reports to the Congressional Oversight Committee in matters of taxation is a function of the Internal Revenue Service.
• Theory of Taxation in the government’s necessity for funding.
• Basis of Taxation in the mutuality of support between the people and the government.
• Theories of Cost Allocation include Benefit Received Theory and Ability to Pay Theory.
• The benefit received theory presupposes that the more benefit one receives from the government, the more taxes he should pay.
• The ability to pay theory presupposes that taxation should also consider the taxpayer's ability to pay.
• Taxpayers should be required to contribute based on their relative capacity to sacrifice for the support of the government.
• Vertical equity in the ability to pay theory proposes that the extent of one's ability to pay is directly proportional to the level of his tax base.
• Horizontal equity in the ability to pay theory requires consideration of the particular circumstance of the taxpayer.
• The statutory taxpayer is the person named by law to pay the tax.
• Specific tax is a tax of a fixed amount imposed on a per unit basis such as per kilo, liter or meter, etc.
• Progressive or graduated tax is a tax which imposes increasing rates as the tax base increase.
• Mixed tax manifests tax rates which is a combination of any of the above types of tax.
• Regressive tax is a tax that imposes decreasing tax rates as the tax base increase.
• Indirect tax is when the tax is paid by any person other than the one who is intended to pay the same, the tax is said to be indirect.
• Excise or privilege tax is a tax imposed upon the performance of an act, enjoyment of a privilege or engagement in an occupation.
• Direct tax is when both the impact and incidence of taxation rest upon the same taxpayer, the tax is said to be direct.
• An economic taxpayer is the one who actually pays the tax.
• Ad valorem is a tax of a fixed proportion imposed upon the value of the tax object.
• Proportional tax is a flat or fixed rate tax.
• National tax is a tax imposed by the national government.
• Local tax is a tax imposed by the municipal or local government.
• The Lifeblood Doctrine in taxation states that taxes are essential and indispensable to the continued subsistence of the government.
• Upon taxation depends the government's ability to serve the people for whose benefit taxes are collected.
• Implication of the lifeblood doctrine in taxation: 1) Tax is imposed even in the absence of a Constitutional grant.
• Claims for tax exemption are construed against taxpayers.
• The delegation of taxing power to local government units involves four stages: levy or imposition, assessment and collection, legislative discretion, and incidence of taxation.
• The primary element of double taxation is the same object.
• Levy or imposition is the process that involves the enactment of a tax law by Congress and is referred to as the legislative act in taxation.
• Direct double taxation occurs when all the elements of double taxation exist for both impositions.
• Business tax situs: Businesses are subject to tax in the place where the business is conducted.
• Situs rules serve as frames of reference in gauging whether the tax object is within or outside the tax jurisdiction of the taxing authority.
• Property tax situs: Properties are taxable in their location.