Art I Sec 8 Clause 1 The Congress shall have Power To lay and collect Taxes Duties Imposts and Excises to pay the Debts and provide for the common Defence and general Welfare of the United States but all Duties Imposts and Excises shall be uniform throughout the United States ID: 419926
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Slide1
Taxing and Spending ClauseSlide2
Art I, Sec. 8, Clause 1
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common
Defence
and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United StatesSlide3
Two
t
ypes of
t
ax in original Constitution
Indirect taxes:
Allowed
if uniform
Includes: customs duties, excises or imposts
Direct taxes:
Must be apportioned among
states
on
basis
of population
Includes: head taxes, property taxesSlide4
Springer v. U.S.
(1881)
Challenge to temporary income tax during Civil War
Question was whether this was direct federal tax, rather than properly apportioned among the states
Court unanimously find that prohibition on direct taxes only applied to head taxes & property taxes levied on landSlide5
Pollock v. Farmers Loan
(1895)
1894 – first peacetime income tax, flat 2% on incomes over $4k (top 3% of population)
Pollock sues own bank to prevent them from paying tax
Pollock’s
atty
argues that tax on income from property is first step on road to communal ownership of propertySlide6
Pollock v. Farmers Loan
(1895)
Major argument:
Is tax on income from property the same as a tax on property – the kind of direct tax prohibited by original Constitution?Slide7
16
th
Amendment
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration. Slide8
McCray v. U.S.
(1904)
U.S. taxed colored oleomargarine at higher rate than uncolored (supposedly to prevent resale as butter)
Court upheld tax as deference to Congress’ ability to regulate for purposes such as preventing fraud in commercial transactionsSlide9
Bailey v. Drexel Furniture
(1922)
Following Sup Ct’s decision in
Hammer v.
Dagenhart
, Congress passes tax on all items made with child labor passing in interstate commerce
Tax seen as serving same purpose as in
McCray
, equalizing costs, cutting incentive to hire childrenSlide10
Bailey v. Drexel Furniture
(1922)
Court strikes down Child Labor Tax Act, saying that tax goes beyond “incidental restraint and regulation” and so has a “prohibitory and regulatory effect”Slide11
Steward Machine v. Davis
(1937)
Employers of 8 or more required to pay federal unemployment insurance
Taxes paid to state unemployment plans credited so long as state plans met federal standardsSlide12
Steward Machine v. Davis
(1937)
Cardozo notes, from 1929-1936:
Average of 10 million unemployed
Peak of > 16 million unemployed
States ran out of relief dollarsSlide13
Steward Machine v. Davis
(1937)
“Every tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed.”
Citing
Sonzinsky
v. U.S.
(1937) (firearms tax case)Slide14
Helvering
v. Davis
(1937)
Companion case to
Steward Machine
, concerned old age and survivors benefits portions of Social Security
Key challenge: states had traditionally provided such welfare benefits
Cardozo notes impossibility of such during “national calamity” of Great DepressionSlide15
U.S. v.
Kahriger
(1953)
Gamblers’ Occupational Tax Act of 1951 requires registration as a professional gambler
Kahriger
argues that gambling properly regulated as moral issue by states and registration violates 5
th
Amendment right against self-incriminationSlide16
U.S. v.
Kahriger
(1953)
From majority opinion:
“the instant tax has a regulatory effect. But regardless of its regulatory effect, the wagering tax produces revenue.”Slide17
South Dakota v. Dole
(1987)
21
st
Amendment gives states power to regulate alcohol sales
Different minimum ages in states gave 18-20 year olds reasons to cross state lines to find alcohol
Congress conditions highway funding on state adoption of uniform 21 year old minimum drinking ageSlide18
South Dakota v. Dole
(1987)
Rehnquist defines four conditions:
Spending must be in “general Welfare” (w/ usual deference to Congress one assumes)
Conditions for receipt must be “unambiguous” and clearly stated so states can “exercise their choice knowingly)Slide19
South Dakota v. Dole
(1987)
Rehnquist defines four conditions:
3. Related “to the federal interest in particular national projects or programs”
4. No other constitutional provision independently bars such conditional grantsSlide20
Should We Tax Fattening Foods?: A Quick Argument For Taxing High Fructose Corn SyrupSlide21
Obesity Rates in U.S. - 1990Slide22
Obesity Rates in U.S. - 2009Slide23Slide24
Estimated diabetes costs in the United States in 2007
Total Cost:
$174 billion
Direct medical costs:
$116 billion
Indirect costs:
$58 billion
(disability, work loss, premature mortality)
Source:
Centers for Disease Control