Taxing and Spending Power - Case Take Aways

Question 1

U.S. v. Butler

Answer 1

U.S. v. Butler - Taxing excess crops not involved in interstate commerce

Common defense and general welfare are permissible reasons, but what are the limits of this power?

• Competing Views of the Taxing and Spending Power
  
  • Madison: Clause is no more than a reference to the other powers enumerated in the subsequent clauses of the same section; that, as the United States is a government of limited and enumerated powers, the grant of power to tax and spend for the general national welfare must be confined to the enumerated legislative fields committed to the Congress.
  • Hamilton: Clause confers a power separate and distinct from those later enumerated and is not restricted in meaning by the grant of them. Congress consequently has a substantive power to tax and to appropriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States.

Separate power that does not need to relate to one of the enumerated powers

• Hamilton’s view is the rule adopted by the majority
• National need is insufficient reasoning because this could easily and quickly become a go-to answer to ignore constitutional requirements

This law violated the commerce clause which requires a nexus of the legislation with interstate commerce

Dissent: Justice Stone believes the Court should only concerned with the authority to enact, not with this wisdom of the act (Invalidation is a task for the political process)

Note – 10th Amendment holding is no longer good law

Question 2

South Dakota v. Dole

Answer 2

South Dakota v. Dole - Drink Age & Interstate Funds

A withholding of a small amount of funds is not a coercive measure and a proper exercise of taxing and spending power

Taxing & Spending Power is Subject to 5 Limitations: (Deference to Congress)

1. Must be in pursuit of the general welfare
2. Must state conditions clearly and explicitly (unambiguous)
3. Must be related to federal interests in programs / projects– Germaneness Requirement
4. Must not be unduly coercive
5. Must be no other constitutional bar (i.e., 10th amendment’s anti-commandeering principle)

Question 3

NFIB v. Sebelius

Answer 3

NFIB v. Sebelius

Plurality’s Three Step “spending” Power Analysis:

Step 1: Are the conditions being challenged concerning conditioning the use of funds or are the conditions part of a separate independent program?

Step 2: If for separate program – Did the states have adequate notice at the time they first agreed to independent condition?

Step 3: If no notice then – Is the condition unduly coercive?

• What percentage of the states budget does the state stand to lose if they don’t agree to it?
• How much federal funding does the state stand to lose? (Anything over 10% has been considered unduly coercive)