FEDERAL EXCISE TAXATION

Abstract

An excise tax is defined, for purposes of analysis of tax policy, as a levy imposed upon the sale or purchase of a particular product or a closely related group of products. In contrast, a tax upon the sale of all products, except articles excluded by specific exemption, or upon the sale of a wide range of products, such as all manufactured goods, is known as a general sales tax, or, more commonly, a sales tax. The concept of an excise as defined above must be distinguished from the legal concept of the term, which for constitutional reasons has been broadened to include additional levies, such as the social security payroll taxes, which are imposed upon bases other than the sale or purchase of goods. Significant use of excises by the Federal government was first made during the Civil War. From that period until World War I, they constituted a major element in the revenue structure. Despite the introduction of new excises during World War I, these levies declined in relative importance because of the rapid development of the income tax. The decline was hastened dur-