Taxing and Spending Clause
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Article I, Section 8, Clause 1 of the United States Constitution, is known as the Taxing and Spending Clause, the General Welfare Clause, the Uniformity Clause and the Welfare Clause. [1]
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[edit] Text
| “ | 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 | ” |
[edit] Taxation for the general welfare
Two theories of the taxing power have been advocated by constitutional scholars: (A) the narrower Madisonian view that taxation must be tied to one of the other specifically enumerated powers such as regulating commerce or providing for the military, and (B) the broader Hamiltonian view that taxation is a separately enumerated, independent power, and that Congress may tax and spend in any way that will benefit the general welfare.
At one point in U.S. history, the United States Supreme Court had imposed a narrow interpretation on the Clause, holding in Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922), that a tax on child labor was an impermissible attempt to regulate commerce beyond that Court's equally narrow interpretation of the Commerce Clause.
This view was later overturned in United States v. Butler, 297 U.S. 1 (1936). In that case the Court held that the power to tax and spend is an independent power; that is, that the Taxing and Spending Clause gives Congress power it might not have anywhere else. The tax imposed in that case was nevertheless held unconstitutional as a violation of the Tenth Amendment reservation of power to the states.
The modern Supreme Court has interpreted this clause to give Congress a plenary power to impose taxes and to spend money for the general welfare, including the power to force the states to abide by national standards by threatening to withhold federal funds. See South Dakota v. Dole, 483 U.S. 203 (1987).
[edit] Limitation on taxes: Apportionment of some direct taxes
Other language in the Constitution expressly limits the taxing and spending power. Article I, Section 9 has several clauses so addressed. Clause 4 states:
- No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.
A tax (if any) subject to the apportionment rule would have to be imposed among the states in proportion to each state's population. This means that the dollar amount of such taxes imposed on the taxpayers within any given state would be required to bear an arithmetical relationship to the total dollar amount of such taxes imposed in the entire nation that would be equal to the ratio of that state's population to the total population of the nation.
Until 1895, all income taxes were deemed to be indirect taxes, or excises. Direct taxes were limited to property taxes "imposed by reason of ownership," and to capitations (head taxes). Because some income taxes (taxes on income from property, such as interest, dividends, and rent) were, however, treated as direct taxes in the 1895 U.S. Supreme Court decision in Pollock v. Farmers' Loan & Trust Co., the prohibition on unapportioned direct taxes was later eliminated with respect to income taxes by the ratification of the Sixteenth Amendment. In 1916 in the case of Brushaber v. Union Pacific Railroad, the U.S. Supreme Court ruled that under the Sixteenth Amendment, income taxes were constitutional even though unapportioned.
[edit] Limitation on taxes: No taxes and duties on exports
Clause 5 prohibits taxes and duties on exports:
- No tax or duty shall be laid on articles exported from any state.
Regarding taxes on exports, the 0.125% harbor maintenance tax on the value of commercial cargo involved in a taxed port use under 26 U.S.C. § 4461 was unanimously ruled unconstitutional in the case of United States v. United States Shoe Corp., 523 U.S. 360, 118 S. Ct. 1290, 98-1 U.S. Tax Cas. (CCH) paragr. 70,091 (1998). The government had argued that the tax was only a "user fee." The Court ruled that it was an unconstitutional tax on exports.
[edit] Limitation on spending
Clause 7 imposes accountability on Congressional spending:
- No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.
