A privilege tax is a tax levied in exchange for a privilege or license granted to the taxpayer. The fee for registering a motor vehicle is one example of a privilege tax.
Many taxes on businesses are characterized as privilege taxes. For example, Arizona's transaction privilege tax is a gross receipts tax on business. In the 1911 case of Flint v. Stone Tracy Co., the United States Supreme Court upheld the constitutionality of a corporate income tax, determining that it was an indirect tax on the privilege of doing business as a corporation.
References
- Oxford Companion to the US Supreme Court: Income Tax, accessed on answers.com, April 30, 2011
 | This tax-related article is a stub. You can help Misplaced Pages by expanding it. |