Congress power to tax and spend is a separate power not confined by Congress

Congress power to tax and spend is a separate power

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Congress’ power to tax and spend is a separate power not confined by Congress’ other enumerated powers 2. Power is not without limits 3. Hamilton believed that clause gives Congress a wholly separate enumerated power to tax and spend as long as it is in furtherance of the general welfare 10 th Amendment: 1. Old view on 10 th Amendment: a. Early cases the courts enforced the 10 th amendment as a limit of the powers for commerce clause and tax and spending b. Seen as a limitation on Congress power 2. Modern View on 10 th Amendment: a. Court has abandoned the idea that the 10 th Amendment is a limit on the power to tax b. Courts do not look at the motives of Congress Bribe: 1. Congress can “bribe” states by withholding federal funds a. As log as what is being induced is not unconstitutional 2. Congress is allowed to create financial incentives 3. 6 Part Test to determine when a bribe is legal/constitutional: a. Must be in pursuit of general welfare
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Constitutional Law – Chapter 4 b. If Congress desires to condition state’s receipt of funds it must do so unambiguously c. Conditions of federal grants may be illegitimate if they are unrelated to the federal interest in particular national projects and programs d. 21t Amendment is not independent constitutional bar to the federal governments conditional grant of funds e. Power may not be used to induce states to engage in activities that would themselves be unconstitutional f. Some circumstances the financial indictment offered by Congress might be so coercive as to pass the point at which pressure turns into compulsion 1. Bailey v. Drexel Furniture Co. (Child Labor Tax Case) – OLD LAW a. Facts: i. Congress passed the Child Labor Tax Law, which constituted a ten percent tax on the profits of any company using child labor. Drexel challenged the law on the ground that it was an unconstitutional attempt by the federal government to regulate child labor in the states–a function exclusively reserved to the states under the Tenth Amendment to the Constitution. b. Rules: i. The child labor tax law was unconstitutional because regulating the use of child labor is a state power reserved to the states by the Tenth Amendment. The statute is unconstitutional because the 10 th amendment is violated. ii. Congress may not impose a tax on an industry as a means of regulating it, where the purpose of raising revenue is merely a “pretext” for accomplishing an illegitimate end (i.e. regulating a local activity that may not be regulated under the commerce power). iii. Manufacturing is not interstate iv. The provisions of the so called taxing act must be naturally and reasonably adapted to the collection of the tax and not solely to the achievement of some other purpose plainly within the state power v. Difference between penalty and tax: 1. Penalty is a regulation 2. Tax is for the purpose of generating revenue vi. Scienters: purpose or intent to harm you 1. Associated with penalties and not tax 2. US v. Kahriger a.
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