What exactly is "Taxation"?

The imposition of a tax; the act or process of imposing and levying a pecuniary [monetary] charge or enforced contribution, ratable, or proportioned to value or some other standard, upon persons or property, by or on behalf of a government or one of its divisions or agencies, for the purpose of providing revenue for the maintenance and expenses of government.

The term "taxation", both in common parlance and in the laws of the several states, has been ordinarily used, not to express the idea of the sovereign power which is exercised, but the exercise of that power for a particular purpose, to raise a revenue for the general and ordinary expense of the government, whether it be the state, county, town, or city government. But there is another class of expenses, also of a public nature, necessary to be provided for, peculiar to the local government of counties, cities, towns, and even smaller subdivisions, such as opening, grading, improving in various ways, and repairing highways and streets, and constructing sewers in cities, and canals and ditches for the purposes of drainage in the country. They are generally of peculiar [distinctive] local benefit. These burdens have always, in every state, from its first settlement, been charged upon various principles; but, whatever principle of apportionment has been adopted, they have been known, both in the legislation and ordinary speech of the country, by the name of "assessments". Assessments have also, very generally, if not always, been apportioned upon principles different from those adopted in "taxation", in the ordinary sense of that term; and any one can see, upon a moment's reflection, that the apportionment, to bear equally, and do substantial justice to all parities, must be made upon a different principle from that adopted in "taxation" so called.

The differences between taxation and taking property in right of eminent domain are that taxation exacts money or services from individuals, as and for their respective shares of contribution to any public burden; while private property taken for public use, by right of eminent domain, is taken, not as the owner's share of contribution to a public burden, but as so much beyond his share, and for which compensation must be made. Moreover, taxation operates upon a community, or upon a class of persons in a community, and by some rule of apportionment; while eminent domain operations upon an individual, and without references to the amount or value exacted from any other individual, or class of individuals.

So just what are "Taxes", really?

Tax - To impose a tax; to enact or declare that a pecuniary contribution shall be made by the persons liable, for the support of government. Spoken of an individual, to be taxed is to be included in an assessment made for purposes of taxation.

As poignantly explained within Black's Law Dictionary [3rd Edition], taxes are a ratable portion of the produce of the property and labor of the individual citizens, taken by the nation, in the exercise of its sovereign rights, for the support of government, for the administration of the laws, and as the means for continuing in operation the various legitimate functions of the state. In a general sense, a tax is any contribution imposed by government upon individuals, for the use and service of the state, whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name. In even simpler explanation, "taxes" as the term is generally used, are public burdens imposed generally upon the inhabitants of the whole state, or upon some civic division thereof, for governmental purposes, without reference to peculiar benefits to particular individuals or property.

To metaphorically explain the distinction between what are 'Direct' and 'Indirect' categories of taxation, as pertaining specifically to taxing ones remuneration in exchange for their personal time, labor, or barter. Imagine (if you will) an orange tree [the roots, trunk, leafs, branches, and surrounding soil] as representing ones 'remuneration for laboring or bartering' (or existing as ones pay or salary in exchange for your time, labor, or barter rendered, which is to serve as the potential future 'source' of ones gained 'income') and imagine the oranges [or 'fruit'] which grows from this tree as being the 'income' (or interest) gained (or 'derived') from storing ones 'remuneration for laboring or bartering' (pay or salary) within an FDIC [or similar] bank savings account. The federal government may [Indirectly] thereafter pick [or 'tax'] the oranges [or 'fruit'] (the 'interest' gained from storing ones 'remuneration for laboring or bartering', pay, or salary for time or labor rendered within a federally backed [FDIC or similar] bank savings account) from this tree without compromising or violating the inherent sustenance (or substance) of this tree. However, should the federal government [Directly] take [or 'tax'] the roots, trunk, branches, leafs, and/or soil of the tree is an act which serves to compromise or violate the sustenance (or substance) of this tree (meaning one's guaranteed inalienable rights). Ergo, for the federal government to mandate such tact is to essentially "axe" (to deprive the rightful property of; to inhibit or restrict the future usefulness of; to prevent the future growth, spirit, and free will of) the tree. Ultimately, this is the distinguishable difference between what is meant by a "Capitation Tax" or "Personal Tax" (or a "Direct Tax" - requiring "Apportionment") and an "Excise Tax" (or an "Indirect Tax" - requiring "Uniformity").

Direct Forms of Taxation

"The following are presumed to be the only direct taxes. Capitation or poll taxes. Taxes on lands and buildings. General assessments, whether on the whole property of individuals, or on their whole real or personal estate; all else must of necessity be considered as indirect taxes."
From Alexander Hamilton's argument in the Hylton Case (quoted from his son's 1851 publication of Hamilton's writings)

Direct forms of taxation [Assessments, Capitations, Polls, "Taxes", et al] are a charge apportioned either among the whole people of the state, or those residing within certain districts, municipalities, or sections. 'Direct Taxes' are required to be imposed. If such taxes are levied for the public charges of government, it shall be shared according to the estate, real and personal, which each person may possess; or, if raised to defray the cost of some local government of a public nature [such as through "Assessments"], it shall be borne of those who will receive some special and peculiar benefit or advantage which an expenditure of money for a public object may cause to those on whom the tax is assessed. More simply put, Direct Taxes are the enforced proportional contribution of person and property, levied by the authority of the state for the support of government, and for all public needs; portions of the property of the citizen, demanded and received by the government, to be disposed of to enable it to discharge its functions.

Direct Taxes are taxes, which are demanded from the very persons who, it is intended or desired, should pay them. Direct Taxes include those taxes designated under which are to be assessed upon the property, person, business, income [not to be confused with "incomes" as specially defined within Amendment XVI], etc., of those who are to pay them. Historical evidence shows that personal property, contracts, occupations, and the like, have never been regarded as the subjects of direct tax. The phrase is understood to be limited to taxes on land and its objects or appurtenances [apparatuses], and on polls.

What are "proportioned taxes"? Taxes are "proportional" when the proportion paid by each "taxpayer" bears the same ratio to the amount to be raised that the value of his property bears to the total taxable value, and in the case of a special tax when that is apportioned according to the benefits received.

Classes of Direct Taxation

Assessments - As distinguished from other kinds of [Direct] taxation, "Assessments" are those special and local impositions upon property in the immediate vicinity of municipal improvements which are necessary to pay for the improvement, and are laid with reference to the special benefit which the property is suppose to have derived therefrom. "Assessments" have reference to impositions for improvements which are specially beneficial to particular individuals or property, and which are imposed in proportion to the particular benefits supposed to be conferred. They are justified only because the improvements confer special benefits, and are just only when they are divided in proportion to such benefits.

Capitation Tax - A tax or imposition raised on each person in consideration of his labor, industry, office, rank, etc. It is a very ancient kind of tribute, and answers to what the Latins called "tributum," by which taxes on persons are distinguished from taxes on merchandise, called "vectigalia".

The History Behind Capitations

"The constitution declares, that a capitation tax is a direct tax; and both in theory and practice, a tax on land is deemed to be a direct tax... The provision was made in favor of the southern states; they possessed a large number of slaves; they had extensive tracts of territory, thinly settled, and not very productive. A majority of the states had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. The southern states, if no provision had been introduced in the constitution, would have been wholly at the mercy of the other states. Congress in such case, might tax slaves, at discretion or arbitrarily, and land in every part of the Union, after the same rate or measure: so much a head, in the first instance, and so much an acre, in the second. To guard them against imposition, in these particulars, was the reason of introducing the clause in the constitution."
Supreme Court Justice Paterson in Hylton v. U.S. (3 US 171 [1796])

Local Tax - Those Assessments which are limited to certain districts, as poor-rates, parochial [parish] taxes, county rates, municipal taxes, etc.

Personal Tax - A tax either imposed on the person without reference to property, as a capitation or poll tax, or a tax imposed on personal property, as distinguished from one laid on real property.

Poll Tax - Are taxes upon the registering of persons, such as to participate in the act of voting, taxing directly each person individually without consideration to his property or a tax placed upon a certain class, such as all male individuals.

Subsidy - An "Aid" or "Tribute" tax laid on each subject's ability, according to the value of his lands or goods. Being certain and orderly, are from forced contributions, etc., being levied by authority of law, and by some rule of proportion which is intended to insure uniformity of contribution and a just apportionment of the burdens of government.

A 'benefit' is an advantage; profit; fruit; privilege. It has a broader meaning than "support". So just exactly what are "special benefits", simply put these are in fact "privileges"! Merriam-Webster's Dictionary defines 'privilege' as: "A right or immunity granted as a peculiar benefit, advantage, or favor; especially : such a right or immunity attached specifically to a position or an office". As defined within Blacks Law Dictionary [3rd Edition], a 'privilege' is a particular and peculiar benefit or advantage enjoyed by a person, company, or class beyond the common advantages of other citizens. An exceptional or extraordinary power of exemption. A right, power, franchise, or immunity held by a person or class, against or beyond the course of the law.

Indirect Forms of Taxation

"A tax laid upon the happening of an event, as distinguished from its tangible fruit, is an Indirect Tax which Congress undoubtedly may impose."
Tyler et al, Administrators v. United States, 281 US 497, 502 (1930)

'Indirect Taxes' are taxes, which are demanded from one person, in the expectation and intention that he shall compensate himself for the accrued losses [indemnify himself] at the expense of another, (namely through retail price increases). Indirect Taxes are those which are levied on commodities before they reach the consumer, and are paid by those upon whom they ultimately fall, not as taxes, but as part of the market [purchasing] price of the commodity by the consumer. As quoted: "Ordinarily all taxes paid primarily by persons who can shift the burden upon some one else, or who are under no legal compulsion to pay them, are considered indirect taxes." - [Pollock v. Farmers' L. & T. Co., 157 U.S. 429, 15 S. Ct. 673, 39 L. Ed. 759; Springer v. U.S., 102 U.S. 602, 26 L. Ed., 253]

Classes of Indirect Taxes

Aid/Tribute Tax - A tax paid by an inferior sovereign or state to a superior potentate [ruler], to secure the friendship or protection of the latter.

Customs - A tax placed upon the importation and exportation of commodities; the tax assessed upon goods and merchandise, imported from, or exported to a foreign country.

Duties - A tax on the importation or exportation of goods. Also: 'Ad Valorem', a Duty Tax that is based upon the value of an article or object subject to taxation.

Duties of Detraction - These are taxes levied upon the removal from one state to another of property acquired by succession or testamentary disposition.

Estate Taxes - These are taxes placed upon the right to transfer real property. A tax on the transmission from the dead to the living.

Excises - An excise, is of a different character. It is based on no rule of apportionment or equality whatever. It is a fixed, absolute, and direct charge laid on merchandise, products, or commodities, without any regard to the amount of property belonging to those on whom it may fall, or to any supposed relation between money expended for a public object and a special benefit occasioned to those by whom the charge is to be paid. An Excise Tax is an internal tax levied on the manufacture, sale, or consumption of a commodity; Any of various taxes on privileges often assessed in the form of a license or fee (such as: auctioneers, brewers, etc., and to keep dogs, kill game, etc.). The term is also extended to the imposition of public charges, in the nature of taxes, upon other subjects than the manufacture and sale of commodities, such as licenses to pursue particular callings, the franchises of corporations and particularly the franchise of corporate existence, and the inheritance or succession of estates.

The name given to the duties or taxes laid on certain articles produced and consumed at home, among which spirits have always been the most important.

Franchise Tax - A tax on the right and privilege of carrying on business in the character of a corporation for the purposes for which it was created, and in the conditions which surround it. Not a tax on property, capital, stock, earnings, or dividends.

Gabel Tax - An Excise Tax; a tax on movables, rent, custom, or service.

Imposts - A tax placed upon imported goods, merchandise, and products.

Income Tax - A tax on the yearly profits arising from property, professions, trades, and offices. An income tax is not levied upon property, funds, or profits, but upon the right of an individual or corporation to receive income or profits. Under various constitutional and statutory provisions, a tax on incomes is sometimes said to be an excise tax and not a tax on property, nor on business, but a tax on the proceeds arising therefrom. But in other cases an income tax is said to be a property and not a personal or excise tax.

The Meaning of "Income" - "Income" is the gain which proceeds from labor, business, or property; commercial revenue, or receipts of any kind, including wages or salaries, the proceeds of agriculture or commerce, the rent of houses, or the return on investments; or the amount of money coming to a person or corporation within a specified time, whether as payment for services, interest, or profit from investment, its usual synonyms being "gain," "profit," "revenue." The return in money from one's business, labor, or capital invested; gains, profit, or private revenue. "Income" is the gain derived from capital, from labor, or from both combined; something of exchangeable value, proceeding from the property, severed from the capital, however invested or employed, and received or drawn by the recipient for his separate use, benefit, and dispose. That which comes in or is received from any business or investment of capital, without reference to the outgoing expenditures; while "profits" generally means the gain which is made upon any business or investment when both receipts and payments are taken into account. "Income" when applied to the affairs of individuals, expresses the same idea that "revenue" does when applied to the affairs of a state or nation. "Income" is used in common parlance and in law in contradistinction to "capital." Income, when not derived from personal exertion, is something produced by capital without impairing such capital, the property being left intact, and nothing can be called income which takes away from the property itself. Income is something which has gone out of or issued from capital, leaving the capital unimpaired and intact.

Moreover, "Incomes" as taken to be defined within the XVI Amendment is: A gain derived from capital, from labor, or from both combined. Specifically, "Income" takes into consideration profits gained through a sale or conversion of capital assets.

"The income tax is, therefore, not a tax on income [earnings] as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income which they produce. The income is not the subject of the tax: it is the basis for determining the amount of tax."
House Congressional Record, March 27, 1943, page 2580 [F. Morse Hubbard, legislative draftsman for the United States Treasury Department - testifying before Congress]

Inheritance Tax/Legacy Tax/Succession Tax or Duty - A tax on the transfer of passing of estate or property by legacy, devices, or interstate succession; this is not a tax on the property itself, but on the right to acquire it by descent or testamentary gift. A tax on the transmission or right to receive the property. A tax imposed upon the privilege of receiving property from a descendent, by device or inheritance.

License Tax - Are taxes placed upon the entitlement to engage a particular calling or occupation. Such licenses serve only as permits, not as "contracts". A fee exaction for the privilege of engaging in the business.

Occupation Tax - Are Excise Taxes levied upon a business, trade, or profession for the prosecution thereof. This is not a tax on property or business capital but on the business itself.

Privilege Tax - A tax on the privilege of carrying on a business for which a license or franchise is required.

Sinking Fund - a tax raised to be applied to the payment of interest on, and principal of public loan.

Tallage Tax - Is an Impost or due levied by a lord upon his tenants.

Tariffs - Are Duties and Custom Taxes on merchandise and articles for importation of foreign merchandise.

Toll Tax - An Excise Tax placed on goods, or a custom for the right to a passage.

Transfer Tax - A tax on the passing of the title to property or transfer of bonds or shares of stock.

A 'profit' is the advance in the price of goods sold beyond the cost of purchase. The gain made by the sale of produce or manufacture, after deducting the value of the labor, materials, rents, and all expenses, together with the interest of the capital employed. A 'gain' is a profit; winning; an increment of value.

What is considered to be "taxable"?

Items of which are subject to taxation are those of which have been made liable to be "assessed", along with others, for a share is a tax. Persons subject to taxation are sometimes called "taxables"; so property which may be assessed for taxation is said to be taxable. Applied to costs in an action, the word means proper to be taxed or charged up; to be legally chargeable or assessable.

Now exactly who is a "taxpayer"?

A taxpayer is a person chargeable with a tax; one from whom government demands a pecuniary contribution towards its support. As specific to the Internal Revenue Code a "taxpayer" is defined within 26 USC Section 7701(a)(14) - 'Taxpayer' as: "The term "taxpayer" means any person subject to any internal revenue tax.".

The mere fallacy of taxing all American citizens and residents uniformly for their labor is in reality nonsensical. This is for a very simple and ominous fact. Those who pay less than others are going to expect less action on the part of their government, while those whom pay more than others are going to expect more in return; meaning those whom are more fortunate and privileged are going to expect a much greater exchange (either personally or professionally) for that extra they have provided to their government over those whom have provided so much less to their government. Principally, this is why such [Direct] taxes are to be apportioned, to prevent any one person from contributing anything more or anything less than any other person. Thus, such taxes are fundamentally maintained [proportionate] in respects to each individual state of the Union.

A government that strays from the sound concept of apportionment into one of uniformity serves only to create a great want. Thereafter ultimately resulting in widespread lobbying and special interest groups whom will undoubtedly infect and pervert our Nations leaders with favoritisms, all the time waning the strength from the government under extortion and threat, while reserving it for themselves, (being as such privileged parties are the ones whom control the majority of the Nations wealth, in one capacity or another). In a Commonwealth the government is to exist equally amongst the population as a singular, as it is the government that is the people as a collective of representatives, regardless of their individual wealth, privilege, or other personal indemnities.