RSS FeedWhat is an Excise Tax?
An excise, or excise tax, is simply a tax. “Excise” basically denotes a tax on an event, rather than a tax on a person (a “head tax” or “poll tax”) or on land (“property tax” or “ad valorem tax”) or on something imported (“customs duty”). Sales taxes are excises. According to Black’s Law, an excise is a “tax imposed on the manufacture, sale, or use of goods (such as a cigarette tax), or on an occupation or activity (such as a license tax or an attorney occupation fee).”
So what do we need to know about excise taxes? Nothing! Don’t worry about it. Tax law semantics can be tricky, but it doesn’t make any difference to the discussion of the tax on high-cost health plans, aka “Cadillac plans.”1
- Tax semantics might be relevant to discussion of the constitutionality of the individual mandate penalty. It’s conceivable that those penalties would be construed as a “direct tax” on individuals, rather than as an excise or as an income tax. Direct taxes, under Art. I, § 9, cl. 4, must be laid “in proportion to the census.” See this very helpful overview of constitutional tax issues in health reform from Tim Jost. [↩]
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3 Responses to “What is an Excise Tax?”
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Is an income tax an excise tax? Seems like it is, because income is an event, “I got paid!”
I thought we agreed the mandate is Constitutional?
It seems like the income tax would be an excise, but the Supreme Court long ago decided it was a direct tax, which is why we needed the 16th Amendment–so the income tax could be progressive, rather than in proportion to the census.
I think we do agree the individual mandate is constitutional. My point was that it one could argue it was a direct tax, and then the distinction between direct & indirect/excise would be relevant.
[...] political strategy. But the House’s number one complaint about the Senate bill has been the excise tax on high-cost health insurance plans, largely because of labor unions’ opposition to the [...]