Federalism

Question 1

What is federalism?

Answer 1

The fundamental principle of federalism is the co-existence of the national government and the state governments.

The 10th Amendment provides that the powers not delegated to the US by the Constitution, nor prohibited by it to the States, are reserved to the states respectively or to the people.

The States have police power. The federal government must legislate through one of its enumerated powers.

The US Constitution limits the state’s police powers by:

1. reserving certain enumerated powers exclusively for the federal government;
2. restricting both the federal and state governments from acting in violation of constitutional provisions; and
3. providing under the Supremacy Clause that if Congress enacts legislation with the intention of preempting state law, the congressional regulation will control.

Question 2

What are the immunities of the federal government?

Answer 2

1. The federal government and its agencies are immune from suits by private individuals except where they allow themselves to be sued.
2. The federal government are immune from state taxation and regulation. States may tax and regulate those that deal or contract with the federal government.
3. As a general rule, the Supremacy Clause impliedly prevents the states from regulating the activities of agents or instrumentalities of the federal government if the regulation will interfere with the government’s ability to carry out its federal function.

Question 3

What is the immunities of state governments?

Answer 3

1. The federal government may sue a state without its consent. The Supreme Court has original jurisdiction.
2. A state may be sued by another state.
3. A state may not be sued by its own citizens or those of another state in federal court. However: a. a state may be sued if it consents to the suit; and b. a state officer may be sued for injunctive relief on the theory that his allegedly unlawful conduct was beyond the scope of his authority.
4. Congress is prohibited from commandeering state governments. That is, the federal government cannot force the states to act in their sovereign capacities. Specifically, the federal government cannot force a state to pass a law or administer a federal program.
5. A state enjoys immunity from federal taxation if the taxes is applied either to:
6. unique state activities; or
7. essential governmental functions.

Question 4

What authority is reserved fro the states?

Answer 4

Dormant Commerce Clause

Where Congress has not enacted legislation, the states are free to regulate local transactions affecting interstate commerce.

States cannot discriminate against out-of-state economic acts.

If the state law discriminates on its face against out-of-state goods or economic actors, the state must show (strict scrutiny):

1. the regulation serves a compelling state interest; and
2. the regulation is narrowly tailored to serve that interest.

If the state law merely incidentally burdens interstate commerce, the court will apply a balancing test:

1. The regulation serves an important state interest; and
2. The burden on interstate commerce is not excessive in relation to the interest served.

EXCEPTIONS:

1. Congress may affirmatively authorize states to legislate in areas that would violate the dormant Commerce clause; and
2. when states act as market participants, they may discriminate between in-state and out-of-state businesses.

Question 5

What authority is reserved for taxation for the states?

Answer 5

State taxation of interstate commerce is permissible as long as the tax does not discriminate against or unduly burden interstate commerce.

In determining the validity of a tax affecting interstate commerce, the court will consider the following four factors:

1. there must be a substantial nexus between the activity taxed and the taxing state;
2. the tax must be fairly apportioned;
3. the tax must not discriminate against interstate commerce; and
4. the tax must be fairly related to the services provided by the taxing state.

Question 6

What are the different types of taxes in the states?

Answer 6

States are not permitted to levy ad valorem taxes if the goods are still in the course of transit. However, the validity depends on: a. whether there is a taxable situs within the state; and b. whether the tax s fairly apportioned to the amount of time the equipment is in the state.

A sales tax is a tax upon the transfer of title within the state.

A use tax is a tax upon the use of the goods within the state that were purchased outside the state. The validity of a use tax depends upon whether the seller, who receives the goods from out of state, has a sufficient nexus within the state.

A doing-business tax can be measured by either a flat fee or graduated rate. Such taxes must relate to the benefits conferred by the taxing state upon the business.

A net income tax is a tax upon a company engaging in interstate business. It is valid only as long as the tax is fairly apportioned, has a significant nexus, and is nondiscriminatory.

A flat license fee is unconstitutional. Dealing with drummer or solicitors.

A license tax on on peddlers or salesmen is valid when the state levies it upon a seller who actually sells and delivers the product within the state. It is valid as nondiscriminatory only as long as the tax is fairly apportioned with an equal application to local salespeople.