Ch. 4 other national powers : taxing, spending, war, treaties, and foreign affairs p.151
- Several constitutional powers granted to Congress other than the commerce power
- The taxing and spending powers … to change state regulatory policy .. federalism based limits upon taxing and spending regulations
- (Prof.) problem arises when Congress uses tax power and spending power as regulatory
o look into (i) purpose , (ii) effect
Sec. 1. The taxing powers as a regulatory device
Child Labor Tax Case, 259 U.S. 20 , p.152
- In Hammer v. Dagenhart, 247 U.S. 251, (p.89), the Court held unconstitutional congress’ effort to regulate child labor through commerce power ; after the decision, congress enacted the Child Labor Tax Law of 1919, the coverage provisions were similar to those invalidated in Hammer v. D ; the Court also invalidated the Child labor Tax Law
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o a mere excise tax (levied by the U.S. Congress under its broad power of taxation)
o a regulation of the employment of child labor – an exclusive state function, within the reservations of the 10.th
- <regulatory> here, it provides a heavy exaction for a departure from a detailed and specified course of conduct in biz (DO- provides for a detailed and specified course of conduct à. regulatory,,. if tax, no need to micro-mandate biz conduct)
- <prohibitory, penalty> here, to pay the government one-tenth of his entire net income ;
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o tax – by legislature, with the primary motive of obtaining revenue (from proper subject) , with the incidental motive of discouraging (the proper subjects)
o a mere penalty – with the characteristics of regulation and punishment,, not distinguishable from that of hammer v. D
- Veazie Bank v. Fenno, 75 U.S. 533,
o the sole objection to the tax was its excessive character
o here, no specifications on the fact of the act indicating the purpose to regulate matters of state concern .. to give it the qualities of a penalty .. rather than a tax
o the object of the excessive tax was within the congressional authority
- McCray v. United States, 195 U.S. 27,
- United States v. Doremus, 249 U.S. 86
o the act could not be declared invalid just coz another motive than taxation, not shown on the face of the act, might have contributed to its passage
note
comer power vs. taxing power
federal excise vs. license taxes
Sonzinsky v. United States, 300 U.S. 506
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United States v. Kahriger, 345 U.S. 22, p.155
- Upheld the constitutionality of a federal occupational tax imposed on gambling ;
- the challenger claimed that congress under the pretense of exercising its power to tax, .. to penalize illegal intra-state gambling, through the regulatory feature of the Act (DO – tax vs. regulatory + penalty )
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- it is not determinative that the legislative history suggested a congressional motive to suppress wagering
- regardless of a regulatory effect, the wagering tax produces revenue
- unless there are penalty provisions extraneous to any tax need, courts are without authority to limit the exercise of the taxing power
concurring
- one cannot formulate a revenue-raising plan that would not have economic and social consequence
- the evil of a judicial decision impairing the legitimate taxing power by extreme constitutional interpretations
dissent
- oblique use .. of the taxing power as to matters .. not within the powers delegated to Congress
4.. the taxing power after New Deal p.155
- whether a tax is impermissibly regulatory .. whether there is an area of state autonomy in which it would be impermissible for the federal government to regulate
sec.. 2 spending power as a regulatory device p.156
the national spending power
- federal funding of payment to individuals for old age or unemployment support ; grants to states for education or highway construction .. all involve policy choices with significant regulatory consequences
- litigation rare ß standing
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United States v. Butler, 297 U.S. 1,
- The Act, which sought to stabilize farm prices by curtailing agricultural production ; Agriculture Dept. make contract with farmers to reduce their productive acreage, in exchange for benefit payments ; the payment was made out of processing tax ;
- suit challenging the tax, claiming that it was an integral part of a program that unconstitutionally sought to control agricultural production – an activity that was the province of the state
- Held – the Act not a valid exercise of the power to spend for the general welfare under Art.1.sec.8.cl.1
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o Madison – the grant of power .. must be confined to the enumerated legislative fields committed to the Congress
o Hamilton – separate and distinct from those later enumerated, limited only by .. general welfare of the U.S ß (the Court)
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o “ Should Congress .. adopt measures .. prohibited by the constitution; or should Congress, under the pretext of executing its powers, pass laws for the accomplishment of objects not intrusted to the government; .. such an act was not the law of the land." McCulloch v. Maryland, 4 Wheat. 316, 423
o Here, a statutory plan to regulate and control agricultural production, a matter beyond the powers delegated to the federal government ; the tax .. are but means to an unconstitutional end
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o (i) the regulation is not in fact voluntary ; the price of such refusal is the loss of benefit ; this is coercion by economic pressure
o (ii) even assuming purely voluntary cooperation,, it is a scheme for purchasing “with federal funds” submission to federal regulation of a subject reserved to the states ; .. appropriations and expenditures … not within federal power
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o difference between a statute stating the conditions upon which moneys shall be expended and one effective only upon assumption of a contractual obligation to submit to a regulation which otherwise could not be enforced
o e.g. conditioning – the power of Congress to stipulate the education for which money shall be expended
o submission – appropriation only if .. teach doctrine subversive of the Constitution
- here, congress has no power to enforce its commands on the farmer to the ends sought by the Act
dissent
- the power of Congress to spend is inseparable from persuasion to action over which congress has no legislative control
o Congress may not command that the science of agriculture be taught in state universities. But if it would aid the teaching of that science by grants to state institutions, it is appropriate (DO- maj. think the Act commands farmers”
- The limitation now sanctioned must lead to absurd consequence
o The government may give seeds to farmers, but may not condition the gift upon their being planted in places where they are most needed or even planted at all (DO- maj. think Congress can condition but cannot command)
- If appropriation in aid of a program of curtailment of agricultural production is constitutional, .. payment to farmers on condition that they reduce their crop acreage is constitutional (DO- dissent seems not place weight on coercion)
Spending power after the New Deal p.159
- The Court upheld the unemployment compensation and old age benefit schemes of the Social Security Act
Steward Machine Co. v. Davis, 301 U.S. 548 ,
- Sustained the unemployment compensation provision of the Social Security Act
- not void as involving the coercion of the States in contravention of the Tenth or of restrictions implicit in our federal form of government
- the assailant (drive the state legislature under the whip of economic pressure into the enactment of unemployment compensation laws) vs. the supporters ( .. cooperative ..)
- None of (the objections) is applicable to the situation here developed. ** Butler vs. Social Security Act (here, sustained)
- (a) The proceeds of the tax in controversy are not earmarked for a special group.
- (b) The unemployment compensation law which is a condition of the credit has had the approval of the state and could not be a law without it.
- (c) The condition is not linked to an irrevocable agreement, for the state at its pleasure may repeal its unemployment law.. terminate the credit, and place itself where it was before the credit was accepted.
- (d) The condition is not directed to the attainment of an unlawful end, but to an end, the relief of unemployment, for which nation and state may lawfully cooperate.
Helvering v. Davis, 301 U.S. 619, p.161
p.162. All endorsed the Hamilton position that the power to spend for the general welfare is not limited by the other grants of power in Art.1.sec.8.
South Dakota v. Dole, 483 U.S. 203,
- A challenge to a federal law that conditioned highway funds to states on the states’ agreement to raise the drinking age
- Held- sustained the federal law
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o the federal law, under its (congress) spending power, to encourage uniformity in the States’ drinking age is within constitutional bounds, even if Congress may not regulate drinking age directly
o thus, the objectives, not thought to be within Art.1’s enumerated legislative fields, may nevertheless be attained through the use of the spending power and the conditional grant of federal funds
- (1) .. is derived from the language of the Constitution itself : the exercise of the spending power must be in pursuit of "the general welfare." .. courts should defer substantially to the judgment of Congress.
- (2) we have required that if Congress desires to condition the States' receipt of federal funds, it "must do so unambiguously . . . , enabl[ing] the States to exercise their choice knowingly, cognizant 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."
- (4) other constitutional provisions may provide an independent bar to the conditional grant of federal funds.
- “independent constitutional bar” means – the power may not be used to induce the States to engage in activities that would themselves be unconstitutional
- Here, lose a relatively small percentage of certain federal highway funds
Dissent
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Note - Spending power after Dole p.166
- regarding the third limit, (maj.) has broad view of relatedness ; (dissent) object .. deference
p.167 “political safeguards of federalism” with respect to exercise of the spending power – maybe no, congress need respond only to preference of a majority of states in exercising its spending power, its action may well be at odds with the preference of a dissenting minority of states
Sec.. 3. The war and treaty powers and implied power over foreign affairs
- other than important powers (commerce, taxing, and spending), war power, power to make treaties and deal with foreign
Woods v. p.168
- the authority of Congress to regulate rents by virtue of the war power ended with .. the terminating hostilities on Dec. 31
MO v. Holland p.169
- .. MO to prevent a game warden of the US from attempting to enforce the treaty on the ground that the statute is an unconstitutional interference with the rights reserved to the States by the 10.th
- Art.2. the power to make treaties ; the Art.4 treaties .. supreme law of the land
Note
- Whenever Art.1. powers prove insufficient to reach a local problem, may the national government overcome that obstacle simply by making a treaty with a cooperating foreign government ?
- REED v. Covert (p.171) – no agreement with foreign nation can confer power on the Congress, or on any other branch of Government, which is free from the restraints of the constitution
- In MO v. Holland, the court carefully noted that the treaty involved was not inconsistent with any specific provision of the constitution
- (p.173) OR had prohibited aliens from inheriting from a decedent’s estate, absent reciprocity by the alien’s home nation ; the court – such a statute inescapably affects international relations
