Ronald Reagan on Federal Taxation: "Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
Art. I, section 8, clause 1 provides:
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.
The Rotunda article assigned by link is a very good summary of the power of Congress to tax and spend. May and Ides also have a good summary:
Most important, in United States v. Butler...the Court held that the power to tax and spend is a distinct constitutional power, fully effective without reference to other granted powers....There is no need, therefore, to demonstrate that a taxing or spending measure is directed toward interstate commerce, naturalization, the establishment of post offices, or any other granted power. Thus although Congress may not be able to regulate a local activity that does not substantially affect interstate commerce, Congress may nonetheless tax that activity, or spend money to encourage it, as long as in doing so Congress is promoting the general welfare. In short, the power to tax and spend stands on its own and may be exercised whenever doing so comes within the terms of the grant and does not exceed applicable limitations.
....
Like all constitutional powers, the power to tax and spend is subject to the Bill of Rights as well as to other generally applicable constitutional limitations.
This extreme deference by the Court to Congress is what allows the national government to tax hard-working Americans to bail out Wall Street and the auto industry, and to fund health care, education, housing, social security, and practically everything else from the cradle to the grave. Hamilton's national Leviathan prevailed over Madison's vision of a much smaller and more restrained federal government.
The only tax and spend issue we will discuss in class is South Dakota v. Dole and so-called "conditional spending measures." Here is the issue. Assume a matter of regulation--for example, marriage and divorce law or regulation of alcoholic beverages and the legal age to drink--is one reserved to the states and thus outside the regulatory power of Congress. May Congress regulate these matters indirectly by attaching some kind of condition to a spending bill appropriating, for example, federal highway funds to the states? This, of course, is exactly what Congress did in Dole, when it ordered "the Secretary of Transportation to withhold a percentage of federal highway funds to which a state would otherwise be entitled" unless the state's drinking age law set the minimum age to drink at 21.
Should the Court strike down all attempts by Congress to invade the 10th Amendment reserved powers of the states by attaching conditions to spending bills? Is this an abuse of Congressional power? Or a positive means of encouraging co-operation between Congress and the States?
One of my favorite federal statutes (perhaps my only favorite federal law) is the Religious Land Use and Institutionalized Persons Act, one part of which provides for religious liberty in prisons. Here is the relevant provision:
SEC. 3. PROTECTION OF RELIGIOUS EXERCISE OF INSTITUTIONALIZED PERSONS.
(a) GENERAL RULE- No government shall impose a substantial burden on the religious exercise of a person residing in or confined to an institution, as defined in section 2 of the Civil Rights of Institutionalized Persons Act (42 U.S.C. 1997), even if the burden results from a rule of general applicability, unless the government demonstrates that imposition of the burden on that person--
(1) is in furtherance of a compelling governmental interest; and
(2) is the least restrictive means of furthering that compelling governmental interest.
(b) SCOPE OF APPLICATION- This section applies in any case in which--
(1) the substantial burden is imposed in a program or activity that receives Federal financial assistance; or
(2) the substantial burden affects, or removal of that substantial burden would affect, commerce with foreign nations, among the several States, or with Indian tribes.
Is the conditional spending provision appropriate under Dole? In other words, by conditioning federal funding of state prisons on state compliance with RLUIPA, has Congress acted within its powers under the Dole test for conditional funding? Is this consistent with the idea of federalism?
Finally, consider how the Court dealt with the conditional spending issue in the Health Care Decision. Some analysts think this is the most far-reaching part of the HCD. Do you agree?
