Who said it: Oliver Wendell Holmes, Jr.
Where it was said: Compania General de Tabaccos v. Collector, 275 U.S. 87, 100.
When it was said: 1927.
Some thoughts: The company "Compania general de tobaccos" was a Spanish tobacco company. They brought suit to recover taxes they had paid in the Philippines. The taxes were due on insurance payments, even though the insurance was not bought in the Philippines. For details of the case, see here.
The case hinged on whether the tax was, in fact, a tax rather than a penalty. The company won the case, but Holmes dissented. A slightly fuller version of the quote is
Taxes are what we pay for civilized society, including the chance to insure. A penalty. on the other hand. is intended altogether to prevent the thing punished. It readily may be seen that a state may tax things that, under the Constitution as interpreted, it cannot prevent.Aside from the technical details of the case, Holmes makes the point that we cannot have civilization without taxes.
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