The Taxing and Spending Powers

Question 1

What is the rule from the Child Labor Tax Case [Bailey v. Drexel Furniture Co.]?

Answer 1

A tax is when something is imposed with the primary goal of gaining revenue and the incidental goal of discouraging the taxed activity.

A penalty is when something’s primary goal becomes discouraging a certain activity.

Question 2

Where does the Taxing Power come from?

Answer 2

U.S. Constitution, Art. I, Sec. 8, Clause 1

Question 3

Where does the Spending Power come from?

Answer 3

U.S. Constitution, Art. I, Sec. 8, Clause 1

Question 4

What is the rule from U.S. v. Butler?

Answer 4

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.

Question 5

What is the rule from South Dakota v. Dole?

Answer 5

Congress may put conditions on money it gives to the states.

Question 6

What are three limitations on the Spending Power?

Answer 6

1) The exercise of the Spending Power must be in pursuit of ‘the general welfare.’

2) If Congress desires to condition the States’ receipt of federal funds, it must do so unambiguously.

3) Conditions on federal grants may be illegitimate if they are unrelated to the federal interest in particular national projects or programs.