Federal Regulation of the States - The Taxing and Spending Power as an Alternative to Regulation Flashcards
U. S. Constitution Article I, § 8, Cl. 1
Article I, § 8, cl. 1 gives Congress taxing and spending powers
United States v. Butler
“While, therefore, the power to tax [(spending power)]is not unlimited, its confines are set in the clause which confers it, and not in those of section 8 which bestow and define the legislative powers of the Congress. It results that the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution.” Dole limits this.
Sonzinsky v. United States
An Act by Congress that is on its face a tax is constitutional even if it results in a burden on the thing taxed
Sonzinsky v. United States
Issue
Whether the National Firearms Act was constitution because it placed a heavy burden on dealers, manufacturers and importers of guns
Sonzinsky v. United States
Facts
The National Firearms Act placed a $200 yearly tax on gun dealers, a $500 yearly tax on importers and manufacturers, and a $200 on each $200 tax on each transfer of firearm. Petitioner claimed it was a penalty for dealing in certain guns
Sonzinsky v. United States
Reasoning
An act that clearly creates a tax isn’t any less a tax if it is burdensome and suppresses the thing it taxes. Every tax puts a burden on what it taxes. Courts are not allowed to consider why Congress makes an act.
Taxing Power Analysis/Criteria
- Burdensomeness of the tax
- Whether there is a scienter (mens rea) requirement
- How the tax is enforced
National Federation of Independent Business v. Sebelius
\The ACA’s taxing people who refused to buy insurance as a “shared responsibility payment” was constitutional under the taxing power because it would be less expensive than buying insurance, it didn’t require people to intentionally not buy insurance, and the payment was collected by the IRS like any tax. It didn’t matter that Congress was trying to influence behavior
South Dakota v. Dole
Congress may condition the receipt of federal funds if the condition relates to the general welfare, is clear, is related to a federal project or program, and does not violate other parts of the Constitution.
South Dakota v. Dole
Issue
Whether it was constitutional for Congress to withhold federal highway funds from states that allowed people under 21 to buy beer
South Dakota v. Dole
Facts
South Dakota allowed people 19 years old or older to buy beer. When Congress passed 23 U.S.C. § 158, South Dakota sued saying the law went past the limits of the spending power and violated the 21st Amendment, which gave states the power to regulate alcohol.
South Dakota v. Dole
Reasoning
The court uses four factors to decide if a tax is constitutional. The tax must support the general welfare, and courts defer to Congress’s judgement on this. If Congress puts conditions on the receipt of grants, they must be clear so states can make informed decisions. Conditions might be illegitimate if they’re not related to national projects or programs. Other constitutional provisions might bar the conditions, which bars Congress from making the states do something unconstitutional. Here, Congress enacted the law to make interstate highways safer because studies showed that young people drove to states that had a lower drinking age to drink and this caused many accidents. The condition was clear. The act didn’t force states to do something unconstitutional. It gave states a choice and those that didn’t raise the drinking age only lost a small amount of federal funding.
National Federation of Independent Business v. Sebelius
Expanded Medicaid Eligibility
The ACA expanded Medicaid eligibility and offered more money to states that agreed to the expansion but conditioned ALL Medicaid funding on adopting the expansion. The Court said it was unconstitutional because it was an ultimatum – accept the program or lose all the money. The Medicaid grant was a huge part of states’ budget. Plus, the expansion was so different from Medicaid it was like another program. The could concluded Congress understood states would have no choice but to accept the program because it didn’t provide for back up insurance for poor people. NFIB added one more element to the Dole analysis: the tax cannot be unduly coercive.
