Other National Powers: Taxing, Spending, War, Treaties, and Foreign Affairs

Like the regulation of IC, the taxing & spending powers of Fed Gov have been used to attempt to change State regulatory policy

Section 1. The Taxing Power as a Regulatory Device

Art. I §8, cl. 1 grants Congress the Power to lay & collect Taxes, Duties, Imposts and Excises to pay the Debts & to provide for the Common Defense and Gen. Welfare of the U.S.

PRE 1937 CASES:

Bailey v. Drexel Furniture Co. (Child Labor Tax Case)(BAD LAW, BAD TEST)

Test: Is it an incidental restraint, ie. excise tax or is it a penalty?

Bad Law, relies on potential for abuse argument

The motive, other than taxation, must be shown on the fact of the act

The motive & operation here was so blatantly punishment & penalty for a disliked business conduct

The “tax” claim was pure pre-text and was thus contradictory to McCulloch

Veazie Bank

Tax increased 10 fold but held not to be a penalty

“if the purpose of the tax falls w/in the enumerated powers then it is okay given the existence of the N&P clause, but if it is a penalty it is not.

Sonzinsky

Tax of annual license fee of $200 for Gun Sales upheld cause was “productive of some revenue

POST 1937 Cases

U.S. v. Kahriger

Ct. upheld Fed Occupational Tax on Gambling

Motive is irrelevant now

A fed tax doesn’t cease to be valid merely cause it discourages or deters the activities taxed

Unless there are penalty provisions extraneous to any tax need, courts are without authority to limit the exercise of the tax power

Start comparing all Fed Powers together , rather than individually

Jackson Concurrence: always going have a revenue effect & discourages motive reviews cause too restrictive

MODERN TEST FOR TAXING: CAN’T TAX STATE ENTITIES BUT CAN TAX ANYTHING ELSE; IT IS ALL INDIRECT NOW, TAX IS NEVER “USED AS A PENALTY’ ANYMORE.

Just ask: DOES THE TAX GENERATE ANY REVENUE

Section 2. The Spending Power as a Regulatory Device

Goes directly to Judicial Review & Marbury and whether the court should even review these types of cases/legislation

Problems only arise when it is perceived that gov. is interfering w/ areas viewed as reserved to the states

ALMOST ALL FED MONEY HAS CONDITIONS ON IT FOR USE

U.S. v. Butler

Was a processing tax on cotton on a certain mill

Butler claimed was an interference w/ agriculture which is left to the states traditionally

Madison thought gov could only spend for the enumerated powers; Hamilton thought could spend for anything for gen welfare.

Hamilton’s view is the one adopted

But court still struck down the tax cause it was too coercive & impeded on an area reserved for states rights (really applied Madison view)

Basically: Fed gov. no business at all in this local area, says can give $ but can’t do so only upon conditions.

Can’t use valid means to effect a prohibited end

Modern Rule: IF THE EXPENDITURE IS FOR A NATIONAL PUBLIC PURPOSE, THAT PURPOSE WONT BE THWARTED B/C PAYMENT IS ON CONDITION WHICH WILL ADVANCE THAT PURPOSE

The Spending Power After the New Deal

Steward Machine

Ct. sustained the unemployement compensation provisions of the Social Security Act

The states were unable to give the help needed so the national gov needed to help so people wldnt starve

The tax and the credit in combo were not weapons of coercion, were joint efforts to encourage States to develop unemployment for gen welfare

Helvering v. Davis

Ct. upheld old age benefits

In these rulings the court had a basis to believe spending was for gen welfare

South Dakota v. Dole ( Modern View, still the Law)

Must be for gen welfare? Defer to congress judgment

Must be unambiguous if going to condition the receipt of funds, allowing States to exercise choice knowingly

MUST be RELATED to the fed interest

Is the exercise otherwise barred by other constitutional provisions

GOV CAN DO INDIRECTLY WHAT IT CANT DO DIRECTLY

Section 3. The War and Treaty Powers and Implied Power Over Foreign Affairs

Woods v. Cloyd (War Power)

Rent Freeze- after war over but still crazy housing shortages- used war power- and argued still an affect from war & so Congress can regulate it.

Can do this so long as war affects persist

Very powerful in conjunction w/ the N & P clause

The War was at this time still a direct and immediate cause of the current problem so could use the power

MO v. Holland (Foreign Affairs)

Cantrell: says classic case of misleading (prob not able do now) cause treaties must also comport with constitution

Cant have a treat (or executive agreement) that abridges or offends a right conferred by the const.

A US/UK treaty to protect certain endangered birds

Holding: If the treaty is valid, so is the act enforcing it, even if the act w/o the treaty would be unconstitutional. This statute is N & P to execute the will of the gov’t.

A valid treaty overrides a state law on matters otherwise w/in state control

ACTS OF CONTRESS ARE SUPREME LAW OF THE LAND ONLY WHEN MADE IN PURSUANCE OF THE CONSTITION; WHILE TREATIES ARE DECLARED TO BE SO WHEN MADE UNDER AUTHORITY OF THE US.

Heirarchy of Authority of Fed Law

Constitution

Treaties and Fed Law are on the same level of authority

Executive Agreements

State Laws

Treaty can be executed in U.S. (enforced as domestic law) 2 ways:

Need enabling legislation to make executing

Self-executing, takes effect now

Congressional Power over “Foreign Affairs”:...

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