Excise in the United States (USA)

October 13, 2010US Taxby EconomyWatch


Excise Tax in United States is imposed on the consumption of specific commodities, and distributions of these commodities as well. The rate at which Excise Taxes are imposed on imported commodities and locally made commodities may not be the same. The Excise Tax rate imposed on these two type of commodities vary subject to certain factors.


Constitutional implications of United States Excise Tax:

According to the American constitutional law, like sales tax, gift tax, transfer tax, payroll tax, miscellaneous excise tax and income tax, Excise Tax is also considered to be an important Event Tax. It is imposed on events like:

  • Realization of revenues
  • Sales
  • Transferring titles, owing to the death
  • Transferring titles by gift

In fact, the Constitution of United States of America refers Excise Tax to be basically an indirect tax. Herein, it is somewhat different from Excise Duty, as Excise Duty is normally levied on fresh events or activities like importation and not on goods imported previously.

Implications of American Excise Duty with respect to Statutory Law:

The term ' Excise Tax' with respect to the statutory laws of United States of America has a different connotation altogether. In the American statutory sense, only the "Miscellaneous Excise Taxes" are referred to as proper Excise Taxes. In America, the Federal statutory excise taxes are levied under Subtitle D (Miscellaneous Excise Taxes) of the Internal Revenue Code and these taxes are associated with commodities like:

  • Heavy trucks and trailers
  • Firearms
  • Petroleum products
  • Luxury passenger vehicles
  • Non-deductible financial contributions to some employer plans
  • Amusement equipments
  • Gas guzzler automobiles
  • Vaccines
  • Air and water transportations
  • Coal
  • Chemicals
  • Certain imported commodities
  • Tires
  • Foreign life insurance policies
  • Gambling
  • Removing hard mineral reserves from the depths of the sea beds

When imposed on state levels, Excise Tax in United States is called by other names as well. In the state of Massachusetts, Excise Tax is imposed on automobiles, and is referred to as an Ad Valorem Tax.

Another instance of Excise Tax in United States is the tax imposed on the importation or sales of particular commodities. Here, Excise Tax is also imposed in the form of a fixed rate tax on the importation or sale of special goods. This is how the American Excise Tax is different from the Value-Added Tax (VAT) or general Sales Tax.

Need for the imposition of Excise Tax in United States:

On state levels, Excise Tax is imposed for following reasons:

  • To restrict the import of certain commodities Excise Tax is imposed.
  • Another reason for levying Excise Tax on certain commodities is to internalize the extraneous or foreign costs. For instance, tax revenue generated from excise tax on alcohol could be used otherwise, for the treatment of diseases caused by alcohol consumption.
  • In America, Excise Tax is also levied on locally produced items. However, the excise tax rate imposed on local goods varies when there is an implicit or explicit customs duty or tariff enforced on those goods.


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