Taxing & Spending Powers

Question 1

Taxing & Spending Powers

Answer 1

Art. 1 § 8: The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; but all duties, imposts and excises shall be uniform throughout the United States

Question 2

1) Now that we have limitations on Congress powers via Com Claus (Lopez and Morrison):

Answer 2

Courts use tax and spending powers as the source of power if Com Clause cannot be the source

Question 3

3) Taxing Power Constitutionality:

Answer 3

revenue stream or penalty is dividing line between con’l/not

Question 4

a) Historically, Congress only had tax power…

Answer 4

in conjunction w/ enumerated powers. Now, an independent power.

Congress uses taxes as a means to achieve policy objectives it couldn’t do directly (totally Con’l!)

Question 5

i) Child Labor Tax Case:

Answer 5

tax on profits of employers of child labor–>uncon’l because this is a penalty, not a tax
(1) “They do not lose their character as taxes because of incidental motive. But there comes a time in the extension of penalizing features of the so-called tax when it loses its character as such…”

Question 6

(1) NFIB:

Answer 6

‘penalty’ for not buying healthcare is a tax–>con’l; Taxes incentivizing activities isn’t new/uncon’l

Question 7

4) Spending Power Constitutionality:

Answer 7

persuasion/inducement and coercion is dividing line between con’l/not

a) Fed funding in exchange for imposing st regulation to further a fed policy

Question 8

b) Persuasion: I’m going to double your allowance if….

Answer 8

i) “to hold that motive or temptation is equivalent to coercion is to plunge the law into endless difficulties”
(1) Steward Machine Co.: Social Security Act giving employers 90% credit on fed taxes if they pay into st unemployment comp program (motive: encourage states to set up unemployment comp programs)–>Con’l

ii) Dole: Con’l for fed to withhold 5% of highway fund from states allowing people under 21 to buy alc
(1) main purpose for which highway funds are expended = safe inter travel
(2) Dissent: entitled to require highways be safe, but not that st impose laws re economic/social policies

Question 9

c) Coercion: Not a viable option; I’m going to take away your allowance if you don’t….

Answer 9

i) NFIB: uncon’l for Congress to coerce states to adopt Medicaid expansion by threatening to withhold State Medicaid grant = coercion = threatening to take away what had the flavor of an entitlement
ii) Butler: in order to raise farm prices, Act authorized fed to contract w/ farmers to reduce crops in exchange for benefits–>uncon’l; coercion by economic pressure (Farmers who opt-out will receive less for crops; those who opt-in will undersell crops–>financial ruin for not opting-in)
(1) Dissent: nation-wide depressed state of agriculture gives Congress power to promote gen welfare via Act