TAX 101

Inherent Powers of the State:

PET as Acronym –

A. Police Power – The power of the State to enact laws in relation to properties and persons promote public health, safety, public moral, and general welfare.

B. Eminent Domain – the power of the State to those to whom power has been delegated to take private property for Public use upon paying the owner just compensation to ascertained according to law.

c. Taxation – the power of the State by which sovereign States raises revenue to defray necessary expenses of the government.

Similarities of PET:

A. Inherent by the State

B. Exist Independently of the Constitution.

C. Legislative in nature and character.

D. They interferes with private rights and property.

E. Presupposes equivalent compensation.

Distinction of the three inherent powers;

A. Benefits received ;

  1. Police Power – no direct or immediate effect.
  2. Eminent Domain – market value of property taken.
  3. Taxation –  in the form of protection and benefit.

B. Imposition:

1. Police Power – limited to the cost of license.

2. Eminent Domain – no imposition, owner received just compensation.

3. Taxation- no limit.

C. Constitution:

  1. Police power – superior to the clause.
  2. Eminent Domain – inferior to the clause.
  3. Taxation – inferior to the clause.

D. Effect:

  1. Police Power – no transfer of title.
  2. Eminent Domain – transfer of the right of property.
  3. Taxation – taxes becomes public funds.

E. Purpose:

1. Police power – government only.

2. Eminent Domain – government, public service, utilities.

3. Taxation – government only.

G. As to persons affected:

  1. Police Power – community or class of individuals.
  2. Eminent Domain – individual or owner of particular property.
  3. Taxation – community or class of individuals.



About Jonathan Ruiz CPA

Entrepreneur, CPA Mentor, Stock market Newbie Mentor, Influential Author and Master's Degree in International Business graduate in Hult International Business School, UK. A father of two lovely daughters.
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