Editing Direct tax (section)

==General meaning==
In general, a direct tax is one imposed upon an individual person ([[juristic person|juristic]] or [[natural person|natural]]) or property (i.e. real and personal property, livestock, crops, wages, etc.) as distinct from a tax imposed upon a transaction. In this sense, indirect taxes such as a [[sales tax]] or a [[value added tax]] (VAT) are imposed only if and when a taxable transaction occurs. People have the freedom to engage in or refrain from such transactions; whereas a direct tax (in the general sense) is imposed upon a person, typically in an unconditional manner, such as a poll-tax or head-tax, which is imposed on the basis of the person's very life or existence, or a property tax which is imposed upon the owner by virtue of ownership, rather than commercial use. Some commentators have argued that the distinction rests on whether the burden of taxation can be shifted from one [[legal person]] to another.<ref name="Britannica">''Britannica Online'', Article on [http://www.britannica.com/eb/article-72003/taxation Taxation]</ref><ref>Financial Dictionary Online Direct Tax http://financial-dictionary.thefreedictionary.com/Direct+taxes Direct taxes]</ref>

Direct taxes are thought to be borne and paid by the same person. The person who pays the amount of direct tax does not recover all or part of the tax elsewhere. It is in this sense that direct taxation is opposed to indirect taxation. It is the notion of fiscal incidence which allows to analyse who ultimately, weights the burden of a tax, that determines whether the tax is direct or indirect. Direct taxation is generally declarative (established either by the person concerned or by a third party).

The unconditional, inexorable aspect of the direct tax was a paramount concern of people in the 18th century seeking to escape tyrannical forms of government and to safeguard individual liberty.

In ''[[The Wealth of Nations]],'' [[Adam Smith]] was the first to extensively discuss in English the distinction between direct and indirect taxation by those names, as in the following passage{{efn|text=While Sir James Steuart's ''An Inquiry into the Principles of Political Œconomy'' predated Smith's work by nearly a decade, Steuart's discussion of direct and indirect taxation occurred under the alternative categorical names of cumulative and proportional taxation, respectively; Steuart also discussed a nonmonetary form of taxation which he denoted "personal", which involved compelled individual service (e.g., militia or military service, jury duty, etc.). The likely first use of the concept of direct taxation was in Mirabeau's ''Théorie de l'Impôt'' in 1760.}}:

{{cquote|It is thus that a tax upon the necessaries of life operates exactly in the same manner as a direct tax upon the wages of labour. ... if he is a manufacturer, will charge upon the price of his goods this rise of wages, together with a profit; so that the final payment of the tax, together with this overcharge, will fall upon the consumer.<ref name="Smith">{{cite book|last=Smith|first=Adam|title=Wealth of Nations|edition=4|year=1786|orig-year=1776|volume=3|url=https://books.google.com/books?id=l3MwqyVcrcAC}}</ref>{{rp|333}}}}

[[Justice (title)|Justice]] [[William Paterson (judge)|William Paterson]] quotes Smith approvingly,<ref name="Hylton">{{cite court|litigants=Hylton v. United States|vol=3|reporter=Dall.|opinion=171|date=1796|url=https://tile.loc.gov/storage-services/service/ll/usrep/usrep003/usrep003171/usrep003171.pdf}}</ref>{{rp|180-181 ([[seriatim]] op.)}} noting that indirect taxes are “circuitous modes of reaching the revenue of individuals,”<ref name="Hylton"/>{{rp|180}} which implies that direct taxes are those which are not circuitous.{{efn|text=Whatever this precisely means, however, is unclear.  Nonetheless, “the distinction was widely understood among the [[Founding Fathers of the United States|founding generation]]” of the United States.  {{cite journal|last=Natelson|first=Robert|date=2015|title=What the Constitution Means by "Duties, Imposts, and Excises"—and "Taxes" (Direct or Otherwise)|url=https://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?article=2649&context=caselrev|journal=Case Western Reserve University Law Review|volume=66|issue=2|page=297}}{{rp|345}}}}

The [[Pennsylvania Minority]], a group of delegates to the 1787 [[U.S. Constitutional Convention]] who dissented from the document sent to the states for ratification, objected over this kind of taxation, and explained:

{{cquote|The power of direct taxation applies to every individual ... it cannot be evaded like the objects of imposts or excise, and will be paid, because all that a man hath will he give for his head. This tax is so congenial to the nature of despotism, that it has ever been a favorite under such governments. ...

The power of direct taxation will further apply to every individual ... however oppressive, the people will have but this alternative, either to pay the tax, or let their property be taken for all resistance will be vain.<ref>[http://memory.loc.gov/cgi-bin/query/r?ammem/bdsdcc:@field(DOCID+@lit(bdsdccc0401)) ''The Address and Reasons of Dissent of the Minority of the Convention, of the State of Pennsylvania, to their constituents.'']</ref>}}