Internal Revenue Taxes.—Excises are taxes laid upon the manufacture and sale of certain products within the country. At the present time these internal revenue taxes are levied by the National government upon liquors,[[23]] tobacco, snuff, opium, oleomargarine, filled cheese, mixed flour, and playing cards. The greater number of these taxes are paid by the purchase of stamps, which must be affixed, in the proper denominations, to the articles taxed. When the packages are broken, the stamps must be destroyed so that they cannot be used again.
War Taxes.—Because taxes of this kind are so easily collected, the government has extended them to a great number of articles when it suddenly needed a large revenue, as in the War of 1812, the Civil War, and the Spanish War of 1898. The law of 1898 increased the taxes on liquors and tobacco, and imposed new taxes on (1) proprietary articles, and (2) documents. Under the first heading fall patent medicines and compounds of various kinds. Documentary taxes[[24]] were imposed upon legal papers, such as deeds, mortgages, etc., and also upon bank checks and drafts, telegraph and telephone messages, and express receipts. Under this law the internal revenue receipts rose from $170,000,000 in 1898, to $273,000,000 in 1899. Congress has repealed these special war taxes.
Corporation Tax.—In 1909 Congress levied a tax upon corporations. Every corporation doing interstate business is required to report its earnings and its expenses. The difference between these amounts is its net earnings. The law requires the payment of one per cent of the net earnings that are in excess of $5000.
Rules for Levying Taxes.—The Constitution contains three rules by which Congress must be guided in the levying of taxes. We have seen, Article I, Section 8, Clause 1, that duties, imposts and excises must be uniform throughout the United States; that is, the same rates must prevail everywhere. Another provision, Article I, Section 2, Clause 3, is that representatives and direct taxes shall be apportioned among the several States ... according to their respective numbers.[[25]]
The third provision is the Sixteenth Amendment, which became a part of the Constitution in February, 1913: Article 16. The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
We have, therefore, the following classification:—
| I. Direct taxes, levied on | persons,[[26]] lands | Must be apportioned among the States according to population |
| II. Indirect taxes | duties, imposts, excises, income taxes. | Must be uniform throughout the United States |
So far, we have discussed the indirect taxes only, for at present the United States levies no direct taxes. In our previous history, however, the government has imposed all the kinds of taxes mentioned in the outline above. In levying a direct tax, Congress must determine the total amount to be raised (as $2,000,000 in 1798, and $20,000,000 in 1861), and then apportion this amount among the States, according to their population.
The bills introduced into Congress which provide for taxation are called "bills for raising revenue." They must originate in the House of Representatives (Article I, Section 7, Clause 1). The Committee on Ways and Means frames these bills. In the Senate such bills are referred to the Committee on Finance, and here the bills may be amended.
The Appropriation of Money.—Appropriation bills are those which provide for the expenditure of the government's funds, and these bills are in charge of the committee on appropriations in each house.