Taxing and Spending Power Forum

[BCLS]

Quick question guys,

I know the taxing and spending power is broad, as stated in Butler, to provide for the general welfare. MY question is this: is the taxing and spending power and independent mechanism for congress to pass laws, like the commerce clause, or is it only a way to manage funds? I'm sort of confused how to approach this in a case that doesnt deal with conditions on spending, like Dole.

[swc65]

It is an independent power. That's where Congress gets the power to make certain criminal laws- think IRS/tax laws.

But, in my class, it is generally talked about as a way to congress to influence behavior indirectly.

[BCLS]

Ok that's kind of how we did it. So we can't say congress is passing a law based on its taxing and spending power. Rather, congress can spend its money for the general welfare, and the N&P clause allows it to regulate.

Furthermore, in Dole, congress can essentially force states to pass laws with conditions so long as they meet the 4 part test.

Sound right?

[Teoeo]

It's an independent power.

[BCLS]

It's an independent power.

An independent power to pass laws?

[Renzo]

So we can't say congress is passing a law based on its taxing and spending power. Rather, congress can spend its money for the general welfare, and the N&P clause allows it to regulate. ?

No. You can indeed say that Congress is passing a law based on taxing power. For example, some people feel that the healthcare mandate is unconstitutional under the commerce clause, but everyone agrees that they could do the exact same thing (tax everyone who doesn't have health insurance) under their taxation power and it would be fine.

[BCLS]

So we can't say congress is passing a law based on its taxing and spending power. Rather, congress can spend its money for the general welfare, and the N&P clause allows it to regulate. ?

No. You can indeed say that Congress is passing a law based on taxing power. For example, some people feel that the healthcare mandate is unconstitutional under the commerce clause, but everyone agrees that they could do the exact same thing (tax everyone who doesn't have health insurance) under their taxation power and it would be fine.

What if we focus on the spending power only? We didn't really talk about the taxing power in class. Can Congress pass something just based on the spending power?

[Renzo]

So we can't say congress is passing a law based on its taxing and spending power. Rather, congress can spend its money for the general welfare, and the N&P clause allows it to regulate. ?

No. You can indeed say that Congress is passing a law based on taxing power. For example, some people feel that the healthcare mandate is unconstitutional under the commerce clause, but everyone agrees that they could do the exact same thing (tax everyone who doesn't have health insurance) under their taxation power and it would be fine.

What if we focus on the spending power only? We didn't really talk about the taxing power in class. Can Congress pass something just based on the spending power?

Are you asking if they can pass a spending bill they don't have the tax revenue to support? Seems so, based on our current national debt.

[BCLS]

I guess I'm wondering if Congress can pass some law through the spending power. I'm not sure they can, only that they can spend for the general welfare. I know that in Sabri, the court passed a criminal law under the N&P clause since it was essential that Congress be able to ensure that federal funds were not diminished or funneled away. So can Congress pass some criminal law like that under the spending power, or must it only be done with the N&P in conjunction with spending power.

Thanks for your patience.

[Renzo]

I guess I'm wondering if Congress can pass some law through the spending power. I'm not sure they can, only that they can spend for the general welfare. I know that in Sabri, the court passed a criminal law under the N&P clause since it was essential that Congress be able to ensure that federal funds were not diminished or funneled away. So can Congress pass some criminal law like that under the spending power, or must it only be done with the N&P in conjunction with spending power.

Thanks for your patience.

I'm not sure what a "spending power" law would look like, if it weren't general welfare appropriations.

[BCLS]

I guess I'm wondering if Congress can pass some law through the spending power. I'm not sure they can, only that they can spend for the general welfare. I know that in Sabri, the court passed a criminal law under the N&P clause since it was essential that Congress be able to ensure that federal funds were not diminished or funneled away. So can Congress pass some criminal law like that under the spending power, or must it only be done with the N&P in conjunction with spending power.

Thanks for your patience.

I'm not sure what a "spending power" law would look like, if it weren't general welfare appropriations.

Ok that's what I figure anyway. Thank you such more for your help in all of these topics lol. Much appreciated as finals come near.

[keg411]

So we can't say congress is passing a law based on its taxing and spending power. Rather, congress can spend its money for the general welfare, and the N&P clause allows it to regulate. ?

No. You can indeed say that Congress is passing a law based on taxing power. For example, some people feel that the healthcare mandate is unconstitutional under the commerce clause, but everyone agrees that they could do the exact same thing (tax everyone who doesn't have health insurance) under their taxation power and it would be fine.

BTW, the mandate basically is a tax already. We had a nice explanation in a supplement to our casebook how it's pretty much a slam dunk under the taxing power as is.

[Renzo]

So we can't say congress is passing a law based on its taxing and spending power. Rather, congress can spend its money for the general welfare, and the N&P clause allows it to regulate. ?

No. You can indeed say that Congress is passing a law based on taxing power. For example, some people feel that the healthcare mandate is unconstitutional under the commerce clause, but everyone agrees that they could do the exact same thing (tax everyone who doesn't have health insurance) under their taxation power and it would be fine.

BTW, the mandate basically is a tax already. We had a nice explanation in a supplement to our casebook how it's pretty much a slam dunk under the taxing power as is.

Yeah, except even the two courts that have upheld the mandate have found the government's argument that the penalty was a tax unpersuasive. Congress went to great lengths in passing the law to make sure that it wasn't viewed as a tax, and so far the courts have been willing to take them at their word.

[vanwinkle]

I think a good way to analyze the taxing and spending power is to ask what else limits Congress' ability to use it. South Dakota v. Dole lays out a four-factor test for determining whether a law is valid under the tax-and-spend power:

1) Exercise of the spending power must be in the general welfare.

2) If the states' receipt of funds is conditioned on something, those conditions must be named unambiguously. The states must have an adequate awareness of the consequences of participating or not participating.

3) Exercise of the spending power "may be illegitimate" (whatever that means) if it's not to advance a federal interest in a national project. Basically this seems to mean (I think) that it must be an issue of national interest and not Congress trying to regulate the affairs of local states and municipalities.

4) "Other Constitutional provisions" might provide a bar to the legislation. Often this means the Tenth Amendment; New York v. United States illustrates the Court's reading of the Tenth Amendment as an affirmative limitation of Congressional power. Essentially Congress can't be so coercive with its tax-and-spend legislation that it violates the Court's opinion of what the Tenth Amendment means. It can also be other Constitutional provisions, however; Buckley v. Valeo invalidated a tax-and-spend bill because its effects were found to violate the First Amendment rights of citizens it affected.

Under South Dakota v. Dole, something can be independently authorized under the tax-and-spend power if it meets the four above requirements.

However, there's a threshold question, I think, also: Ask if the law isn't actually taxing and spending. This is kind of obvious, but look at what Congress tried to do under the Commerce Clause. Morrison and Lopez involved the Court basically saying, no, this isn't actually related enough to commerce. So, a threshold question would be, is Congress actually taxing or spending here? (This, I think, is what the health care debate is all about. It's not obvious from the bill that they're using the tax-and-spend power, and Congress didn't claim it was passed under the authority of the tax-and-spend clause. You can still argue it is, but it requires this threshold argument, showing that it is, in fact, taxing and spending and the clause is meant to provide authority to it.)

[BCLS]

I think a good way to analyze the taxing and spending power is to ask what else limits Congress' ability to use it. South Dakota v. Dole lays out a four-factor test for determining whether a law is valid under the tax-and-spend power:

1) Exercise of the spending power must be in the general welfare.

2) If the states' receipt of funds is conditioned on something, those conditions must be named unambiguously. The states must have an adequate awareness of the consequences of participating or not participating.

3) Exercise of the spending power "may be illegitimate" (whatever that means) if it's not to advance a federal interest in a national project. Basically this seems to mean that it must be an issue of national interest and not Congress trying to regulate the affairs of local states and municipalities.

4) "Other Constitutional provisions" might provide a bar to the legislation. Often this means the Tenth Amendment; New York v. United States illustrates the Court's reading of the Tenth Amendment as an affirmative limitation of Congressional power. Essentially Congress can't be so coercive with its tax-and-spend legislation that it violates the Court's opinion of what the Tenth Amendment means. It can also be other Constitutional provisions, however; Buckley v. Valeo invalidated a tax-and-spend bill because its effects were found to violate the First Amendment rights of citizens it affected.

Under South Dakota v. Dole, something can be independently authorized under the tax-and-spend power if it meets the four above requirements.

However, there's a threshold question, I think, also: Ask if the law isn't actually taxing and spending. This is kind of obvious, but look at what Congress tried to do under the Commerce Clause. Morrison and Lopez involved the Court basically saying, no, this isn't actually related enough to commerce. So, a threshold question would be, is Congress actually taxing or spending here? (This, I think, is what the health care debate is all about. It's not obvious from the bill that they're using the tax-and-spend power, and Congress didn't claim it was passed under the authority of the tax-and-spend clause. You can still argue it is, but it requires this threshold argument, showing that it is, in fact, taxing and spending and the clause is meant to provide authority to it.)

Quick question: The Dole factors only apply to spending with conditions, correct? This is the impression I was under. Thanks!

So for example, Congress can spend for the general welfare, but if it decides to attach conditions, we look to Dole factors.

[vanwinkle]

Quick question: The Dole factors only apply to spending with conditions, correct? This is the impression I was under. Thanks!

This is from the majority opinion of the case itself:

The spending power is of course not unlimited, Pennhurst State School and Hospital v. Halderman, 451 U. S. 1, 451 U. S. 17, and n. 13 (1981), but is instead subject to several general restrictions articulated in our cases. The first of these limitations is derived from the language of the Constitution itself: the exercise of the spending power must be in pursuit of "the general welfare."

I take the language to mean that these factors apply to all spending clause issues. The fact that #2 is phrased as if the spending is conditional indicates the others are meant to apply whether the spending is conditional or not. And I think you always do need the other three factors (general welfare, federal interest/national project, doesn't violate other Constitutional provisions), they all seem like obvious restraints on the clause in general.

[keg411]

So we can't say congress is passing a law based on its taxing and spending power. Rather, congress can spend its money for the general welfare, and the N&P clause allows it to regulate. ?

No. You can indeed say that Congress is passing a law based on taxing power. For example, some people feel that the healthcare mandate is unconstitutional under the commerce clause, but everyone agrees that they could do the exact same thing (tax everyone who doesn't have health insurance) under their taxation power and it would be fine.

BTW, the mandate basically is a tax already. We had a nice explanation in a supplement to our casebook how it's pretty much a slam dunk under the taxing power as is.

Yeah, except even the two courts that have upheld the mandate have found the government's argument that the penalty was a tax unpersuasive. Congress went to great lengths in passing the law to make sure that it wasn't viewed as a tax, and so far the courts have been willing to take them at their word.

That was more the problem - that Congress was stupid and kept saying it wasn't a tax. If Congress had said it was a tax, it would be fine. At least that's what my prof and CB supplement said.

[BCLS]

Quick question: The Dole factors only apply to spending with conditions, correct? This is the impression I was under. Thanks!

This is from the majority opinion of the case itself:

The spending power is of course not unlimited, Pennhurst State School and Hospital v. Halderman, 451 U. S. 1, 451 U. S. 17, and n. 13 (1981), but is instead subject to several general restrictions articulated in our cases. The first of these limitations is derived from the language of the Constitution itself: the exercise of the spending power must be in pursuit of "the general welfare."

I take the language to mean that these factors apply to all spending clause issues. The fact that #2 is phrased as if the spending is conditional indicates the others are meant to apply whether the spending is conditional or not. And I think you always do need the other three factors (general welfare, federal interest/national project, doesn't violate other Constitutional provisions), they all seem like obvious restraints on the clause in general.

Thanks for the help!

[BCLS]

So we can essentially divide the clause:

1. Power to tax;

2. Power to spend.

The first is limited only be the fact that congress must tax for the general welfare (Butler). The second is limited by the Dole conditions?

[vanwinkle]

So we can essentially divide the clause:

1. Power to tax;

2. Power to spend.

The first is limited only be the fact that congress must tax for the general welfare (Butler). The second is limited by the Dole conditions?

I think the Dole conditions can even be seen as applying in taxing situations. If you look at Butler, the Court invalidated the law there basically for violating the factors laid out in Dole. These are some of the reasons given for invalidating the law in Butler:

Regulation of agriculture is (or was at the time) reserved to the states; the law was a scheme for regulating a type of activity typically left to the states and thus impermissible in scope. (Dole factor #3.)

The spending clause may not be used to affectuate an end that is not within the scope of the Constitution; Congress cannot usurp constitutional powers reserved to the states. (Dole factor #4, Tenth Amendment.)

The Court began by noting that the clause does empower Congress to tax and spend for the general welfare (Dole factor #1) but then specified the factors above as reasons for invalidating it. So essentially, without using the form of a test like Dole did, the court was applying the same general factors, long before it considered them "Dole factors". Dole didn't invent anything new, it really is just a consolidation of the court's already-existing factors for invalidating tax-and-spend laws.

(Keep in mind that Dole factor #3, as far as I'm aware, has not been used to invalidate a law since Butler itself, but it is parallel to the "powers reserved to the states" arguments for limiting the Commerce Clause in Morrison and Lopez.)

[BCLS]

Thanks so much Vanwinkle. Essentially always mention Dole factors on an exam then lol. I'm pretty sure if we see a taxing and spending question it is going to involve conditions anyway.

[Chupavida]

.

[BCLS]

Taxing power: Bailey v Drexel Furniture

• Could Congress do this directly under the exercise of another power?
  (commerce, war, blah blah). If so, then the court won't care if they're using taxes as a regulatory tool.
• If Congress can't regulate directly, can they achieve their ends indirectly through taxation? If revenue is not the primary motive, then no.

The court is very wary of attempts by Congress to regulate via taxation since nearly anything can be taxed, and if not checked, Congress could just do an end-run around limitations on other powers. This is why motive is the primary concern in a tax power analysis (compared to commerce with tends to deal with effects).

Spending power: Dole

Court isn't nearly as afraid of the spending power. If the government wants to bribe the states/people to do stuff, then under the Hamiltonian view the court adopted in Butler, more power to them. Test is the four factors in Dole, with the possibility of a fifth factor dealing with coercion (there are some offers that might rise to the level of coercion).

Ok this combined with Vanwinkle's post is helpful- Bottom line: if this is involving any aspect of the spending power, even if its not conditional, we still need to do the 4 dole factors, right guys?

Thanks a ton- glad to have this figured out lol. Can you tell my con law teacher is fantastic?

[vanwinkle]

Ok this combined with Vanwinkle's post is helpful- Bottom line: if this is involving any aspect of the spending power, even if its not conditional, we still need to do the 4 dole factors, right guys?

I think Chupavida makes a good point; first you need to ask if it's lawful under any other power. For example, the Commerce Clause. If it's lawful under the Commerce Clause, then you don't even need to get to the Spending Clause. However, once you're at the Spending Clause I think you need to apply the 4 Dole factors whether it's primarily taxing or spending, and whether it's conditional or not (if there are no conditions you just point out that #2 doesn't apply since there are no conditions).

Keep in mind that on an exam, things will be ambiguous on purpose. It will look like something may be permissible under more than one clause of the Constitution. Your answer, if you see a tax/spend issue, should probably look like this:

I. Commerce Clause

This legislation may be permissible under the Commerce Clause. To analyze legislation under the Commerce Clause, the courts will consider ...

Therefore, it is (likely/not likely) the court will uphold this as a valid exercise of Congress' Commerce Clause power.

II. Tax and Spend Clause

Even if this legislation is not authorized by the Commerce Clause, it may still be independently authorized under the Tax and Spend Clause of the Constitution. United States v. Butler makes clear that Congress' power to act under this clause is independent of its other powers, but that the scope of this power is limited by different Constitutional restraints. United States v. Dole summarizes these restraints by describing four factors the Court applies in its analysis, and this legislation must satisfy all four in order to be found independently authorized under the Tax and Spend Clause.

First, the exercise of this power must be in the general welfare. This Act (is/is not) meant to provide for the general welfare because...

[BCLS]

Ok this combined with Vanwinkle's post is helpful- Bottom line: if this is involving any aspect of the spending power, even if its not conditional, we still need to do the 4 dole factors, right guys?

I think Chupavida makes a good point; first you need to ask if it's lawful under any other power. For example, the Commerce Clause. If it's lawful under the Commerce Clause, then you don't even need to get to the Spending Clause. However, once you're at the Spending Clause I think you need to apply the 4 Dole factors whether it's primarily taxing or spending, and whether it's conditional or not (if there are no conditions you just point out that #2 doesn't apply since there are no conditions).

Keep in mind that on an exam, things will be ambiguous on purpose. It will look like something may be permissible under more than one clause of the Constitution. Your answer, if you see a tax/spend issue, should probably look like this:

I. Commerce Clause

This legislation may be permissible under the Commerce Clause. To analyze legislation under the Commerce Clause, the courts will consider ...

Therefore, it is (likely/not likely) the court will uphold this as a valid exercise of Congress' Commerce Clause power.

II. Tax and Spend Clause

Even if this legislation is not authorized by the Commerce Clause, it may still be independently authorized under the Tax and Spend Clause of the Constitution. United States v. Butler makes clear that Congress' power to act under this clause is independent of its other powers, but that the scope of this power is limited by different Constitutional restraints. United States v. Dole summarizes these restraints by describing four factors the Court applies in its analysis, and this legislation must satisfy all four in order to be found independently authorized under the Tax and Spend Clause.

First, the exercise of this power must be in the general welfare. This Act (is/is not) meant to provide for the general welfare because...

VERY helpful. Another question, the taxing and spending power IS another mechanism for congress to pass a law, on the same level as the commerce clause? So in Butler, the Agricultural act was passed with the spending and taxing power? Same in Dole with that Act?

You are a savior