INCOME TAXATION CHAPTER 1 (1ST SEM_2ND YEAR)

• State power, a legislative process, and a mode of government cost distribution.

  Taxation
• Taxation is an inherent power of the State to enforce a proportional contribution from its subjects for public purpose.

  As a state power.
• Taxation is a process of levying taxes by the legislature of the State to enforce proportional contributions from its subjects for public purpose.

  As a process
• The government's necessity for funding.

  Theory of Taxation
• A system of government is indispensable to every society.

  Theory of Taxation
• Receipt of benefits is conclusively _______.

  Presumed
• Is a mode of allocating government costs or burden to the people.

  Taxation
• Theories of Allocation

  Benefit received theory and Ability to pay theory
• Presuppose that the more benefit one receives from the government, the more taxes he should pay.

  Benefit received theory
• Presupposes that taxation should also consider the taxpayer's ability to pay.

  Ability to pay theory
• Taxpayers should be required to contribute based on their relative capacity to sacrifice for the support of the government.

  Ability to pay theory
• Aspects of the Ability to Pay Theory

  Vertical Equity & Horizontal Equity
• Proposes that the extent of one's ability to pay is directly proportional to the level of his tax (greater income = greater capacity to contribute).

  Vertical Theory
• Requires consideration of the particular circumstance of the taxpayer (less expenses = greater capacity to contribute)

  Horizontal Equity
• Gross concept of ability to pay theory.

  Vertical equity
• Net concept of ability to pay theory.

  Horizontal equity
• Without taxes, the government would be paralyzed for lack of motive power to activate and operate it.

  The Lifeblood Doctrine
• Taxes are _____ of the government.

  Lifeblood
• Implication of the lifeblood doctrine in the taxation:

  Tax is imposed even in the absence of a _____.

  Constitutional grant
• Implication of the lifeblood doctrine in the taxation:Claims for tax exemption are construed against ____.

  Taxpayers
• Implication of the lifeblood doctrine in the taxation:The _____ reserves the right to choose the objects of taxation.

  Government
• Implication of the lifeblood doctrine in the taxation:The ___ are not allowed to interfere with the collection of taxes.

  Courts
• Implication of the lifeblood doctrine in the taxation:In income taxation,

  Income received in advance is ____ upon receipt.

  Deduction for _____ is not allowed as it effectively defers the collection of tax.

  A ___ of deduction is preferred when a claimable expense is subject to limit.

  A ____ base is preferred when the tax base has multiple tax bases.

  Taxable, Capital Expenditures and Prepayments, Lower Amount, & Higher Tax
• The inherent powers of the state.

  Taxation Power, Police Power, & Eminent Domain
• Three powers of the state differences:

  Exercising Authority

  Taxation - ___

  Police Power - Government

  Eminent Domain - ___

  Government, Government and Private Utilities
• Three powers of the state differences:

  Purpose

  Taxation - ___

  Police Power - ___

  Eminent Domain - For public use

  For the support of the government & To protect the general welfare of the people
• Three powers of the state differences:

  Persons affected

  Taxation - Community or class individuals

  Police Power - ___

  Eminent Domain - ___

  Community or class individuals & Owner of the property
• Three powers of the state differences:

  Amount of imposition

  Taxation - Unlimited (tax is based on the government needs)

  Police Power - ___

  Eminent Domain - ___

  Limited (imposition is limited to cover cost of regulation) & No amount imposed (the government pays just compensation)
• Three powers of the state differences:

  Importance

  Taxation - ___

  Police Power - Most superior

  Eminent Domain - ___

  Most important & Important
• Three powers of the state differences:

  Relationship with the constitution

  Taxation - ___

  Police Power - ___

  Eminent Domain - Superior to "Non-impairment Clause" of the constitution

  Inferior to the "non-impairment clause" the constitution & Superior to the "non-impairment clause" of the constitution
• Three powers of the state differences:

  Limitation

  Taxation - ___

  Police Power - Public interest and due process

  Eminent Domain - ___

  Constitutional and inherent limitations & Public purpose and just compensation
• Similarities of the three Powers of the State:

  They are all necessary attributes of ___.

  Sovereignty
• Similarities of the three Powers of the State:

  They are all ___ to the state.

  Inherent
• Similarities of the three Powers of the State:

  They are al ___ in nature.

  Legislative
• Similarities of the three Powers of the State:

  They are all ways in which the ___ interferes with private rights and properties.

  State
• Similarities of the three Powers of the State:

  They all exist ___ of the Constitution and are exercisable by the government even without a constitutional grant. However, the Constitution may impose conditions or limits for the exercise.

  Independently
• Similarities of the three Powers of the State:

  They all presuppose an equivalent form of __ received by the persons affected by the exercise of the power.

  Compensation
• Similarities of the three Powers of the State:

  The exercise of the these powers by the local government units may be limited by the ___.

  National Legislature
• Regarded as comprehensive, plenary, unlimited, and supreme.

  Scope of Taxation
• Taxation has it owns inherent limitations and limitations imposed by the Constitution even though it seemingly ___ nature of taxation,

  Unlimited