NCP: Taxing and Spending Powers

Question 1

Article I, §8 clause 1:

Answer 1

grants Congress power “to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defence and general welfare of the United States.”
a) After Lopez and Morrison, things that are not within the Commerce Power are attempted to be regulated through the taxing and spending power (new broad power)

Question 2

Taxing power issues:

Answer 2

a) Can Congress use it’s power to tax to create authority over activities that would it would not otherwise have authority over?
b) ACA Decision:
i) Roberts opinion allows the taxing power to be used to salvage congressional action that would otherwise be beyond congressional powers. Not what he actually said, but what it means.
ii) Various factors that labeled as a tax and not a penalty:
(a) Collected through the tax system
(b) Labeled in a certain way
(c) Seems designated to generate some revenue.

Question 3

Spending power issues:

Answer 3

a) General view: Congress can spend for the general welfare
i) Issue: is it being used coercively?
ii) Rule (Dole): Spending powers are limited as follows:
(1) It’s exercise must be in pursuit of the general welfare (courts should defer substantially to the judgement of Congress)
(2) If conditioned on receipt of federal funds, it must do so unambiguously, enabling the State to be cognisant of the consequences of their participation.
(3) Conditions on federal grants might be illegitimate if they are unrelated to the federal interest in particular national projects or programs; and
(4) Other constitutional provisions may provide an independent bar to the conditional grant of federal funds.

Question 4

United States v. Butler (1936)(p.136)

Answer 4

i) Facts: Congress implemented a tax on agricultural commodities from which funds would be redistributed to farmers who promised to reduce their acreage - trying to solve agricultural crisis
ii) Held: the court found the act unconstitutional because it attempted to regulate and control agricultural production, a arena reserved to the states, and thereby exceeded its power.

Question 5

Steward Machine Co. v. Davis (1937)(p.138)

Answer 5

i) Facts: The Social Security Act established a federal payroll tax on employers; however, if employers paid taxes to a state unemployment compensation fund they could credit those payments towards the federal tax.
ii) Held: The Act is constitutional under the Fifth and Tenth Amendments - tax was uniform across the states and was not coercive in contravention of the Tenth Amendment.

Question 6

South Dakota v. Dole (1987)(p.142)

Answer 6

Facts: Drinking age legislation attached to highway funds ii) Held: Congress acting indirectly to encourage uniformity in states drinking ages did not exceed its spending powers.

Question 7

Questions of political economy:

Answer 7

Congress has three choices to implement its will: It can tax, spend, or regulate

i) Taxing power is self-regulating. There are political forces that will keep Congress from continuing to add more taxes
ii) Spending is self-regulating: it costs money and proposing incremental additional spending can at times be politically unpopular
iii) Regulation on the other hand looks in the short term as if it is free.
(1) not ultimately but easier to pass because it looks that way.