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“A Short History of Congress’s Power to Tax”

Paul Moreno, professor of history at Hillsdale College:

In 1935, Secretary of Labor Frances Perkins was fretting about finding a constitutional basis for the Social Security Act. Supreme Court Justice Harlan Fiske Stone advised her, “The taxing power, my dear, the taxing power. You can do anything under the taxing power.”

Last week, in his ObamaCare opinion, NFIB v. Sebelius, Chief Justice John Roberts gave Congress the same advice—just enact regulatory legislation and tack on a financial penalty, as in failure to comply with the individual insurance mandate. So how did the power to tax under the Constitution become unbounded?

The first enumerated power that the Constitution grants to Congress is the “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 text indicates that the taxing power is not plenary, but can be used only for defined ends and objects—since a comma, not a semicolon, separated the clauses on means (taxes) and ends (debts, defense, welfare).

This punctuation was no small matter. In 1798, Pennsylvania Rep. Albert Gallatin said that fellow Pennsylvania Rep. Gouverneur Morris, chairman of the Committee on Style at the Constitutional Convention, had smuggled in the semicolon in order to make Congress’s taxing power limitless, but that the alert Roger Sherman had the comma restored. The altered punctuation, Gallatin said, would have turned “words [that] had originally been inserted in the Constitution as a limitation to the power of levying taxes” into “a distinct power.” Thirty years later, Virginia Rep. Mark Alexander accused Secretary of State John Quincy Adams of doing the same thing after Congress instructed the administration to print copies of the Constitution.

The punctuation debate simply reinforced James Madison’s point in Federalist No. 41 that Congress could tax and spend only for those objects enumerated, primarily in Article I, Section 8.

Punctuation?  Why, how “fundamentally unserious”!  Everyone — well, every pragmatist, and those are the only everyones that matter — knows that judicial restraint and classically liberal jurisprudence comes down to electing Republicans, particularly those Republicans who have been groomed as politicians and attended only the best Ivy League schools.

Punctuation?  Let Edgar Allan Poe fret about that.  We serious GOPers are only interested in the serious, real-world stuff.  Like, eg., how we can spin a horrific constitutional affront into a forceful political attack:  LOOK, OBAMA SAID HE WOULDN’T PASS A TAX AND HE DID!  THANKS, JOHN ROBERTS, FOR MAKING OBAMA OUT TO BE THE LYING LIAR NO ONE KNEW HIM TO BE UNTIL YOUR BRAVE AND COMMENDABLE EXERCISE IN SUPER-CLEVER JUDICIAL RESTRAINT!

[…] in 1922, the court rejected Congress’s attempt to prohibit child labor by imposing a tax on companies that employed children. An earlier attempt to accomplish this, by prohibiting the interstate shipment of goods made by child labor, was struck down as unconstitutional—since it was understood since the earliest days of the republic that Congress had the power to regulate commerce but not manufacturing. “A Court must be blind not to see that the so-called tax is imposed to stop the employment of children within the age limits prescribed,” Chief Justice William Howard Taft wrote in Bailey v. Drexel Furniture Co. “Its prohibitory and regulatory effect and purpose are palpable.” Even liberal justices Oliver Wendell Holmes and Louis D. Brandeis concurred in Taft’s opinion.

Things came to a head in the New Deal, when Congress imposed a tax on food and fiber processors and used those tax dollars to provide benefits to farmers. Though in U.S. v. Butler (1936) the court adopted a more expansive view of the taxing power—allowing Congress to tax and spend for the “general welfare” beyond the powers specifically enumerated in the Constitution—it still held the ends had to be “general” and not transfer payments from one group to another. After President Franklin D. Roosevelt threatened to “pack” the Supreme Court in 1937, it accepted such transfer payments in Mulford v. Smith (1939), so long as the taxes were paid into the general treasury and not earmarked for farmers.

And now, in 2012, Justice Roberts has confirmed that there are no limits to regulatory taxation as long as the revenue is deposited in the U.S. Treasury.

Are there any other limits? Article I, Section 2 says that “direct taxes shall be apportioned among the states” according to population. This is repeated in Article I, Section 9, which says that “no capitation, or other direct tax, shall be laid,” unless apportioned.

The Supreme Court struck down income taxes in 1895 (Pollock v. Farmers’ Loan & Trust Co.), on the ground that they were “direct” taxes but not apportioned by population. Apportioning an income tax would defeat the purpose of the relatively poorer Southern and Western states, who wanted the relatively richer states of the Northeast to pay the bulk of the tax. The 16th Amendment gave Congress the power to tax incomes without apportionment.

Other direct taxes should presumably have to be apportioned according to the Constitution. Justice Roberts quickly dismissed the notion that the individual mandate penalty-tax is not a direct tax “under this Court’s precedents.” To any sentient adult, it looks like a “capitation” or head tax, imposed upon individuals directly. Unfortunately, having plenty of other reasons to object to ObamaCare, the four dissenting justices in NFIB v. Sebelius did not explore this point.

Some conservatives have cheered that part of Justice Roberts’s decision that limits Congress’s Commerce Clause power. But an unlimited taxing power is equally dangerous to constitutional government.

And that’s because some conservatives aren’t conservatives at all:  they are GOP cheerleaders who are fine with the Statist agenda so long as they get their turn to wield the power of a big and beneficent federal government.  Call it “compassionate conservatism.”

The era of Reagan is over.  Unless we fight to bring it back.

 

73 Replies to ““A Short History of Congress’s Power to Tax””

  1. cranky-d says:

    We have so much to thank FDR, our first dictator, for. What a legacy he left us.

  2. BigBangHunter says:

    Ok, albeit all of that is true. Call me an apologist if you must but I still think knocking down thw commerce scam was at least as important, maybe more so, because at least with taxation, other than Roberts legislating the ACA on his own in this case, must be passed in Congress, whereas an unlimited commerce power would be a blank check written in bills in a way where no direct vote would be required.

    – Both abominations, but at least with the taxation the perps have to show their hand.

  3. cranky-d says:

    FDR had to scare the court into compliance with his wishes, but Roberts scared himself into compliance with the wishes of progressives. What a guy that Roberts is!

  4. McGehee says:

    BBH, that goes back to whether the Court will respect Roberts’ dictum the next time it hears a Commerce Clause case.

    In my opinion they won’t. They have no reason to.

  5. dicentra says:

    If “judicial restraint” means “hesitating to rule something unconstitutional when it obviously is, because of decades of unquestionably unconstitutional staring at dice or whatever, then damn if we ought consign it to the dustbin of history.

  6. BigBangHunter says:

    – You very well could be right in that McGehee, and in fact unfortunately you probably are. The very fact the court has a long history of revisiting Congressional powers says you are.

    – I’m basing my optimism on nothing more than the hope that at least some of the time they get it right. Not much of a hope I agree, but what else is there.

    – Taxation is always a contentious beast, we see that time after time, even today for instance, Reid was forced to block a vote in the Senate on the Bush tax cut extention.

    – I guess what I’d say is that in the end I’d be much more fearfull of an uncontrollable “commerce clause expansion” than of tsxing powers.

  7. McGehee says:

    – I guess what I’d say is that in the end I’d be much more fearfull of an uncontrollable “commerce clause expansion” than of taxing powers.

    I’ll agree with that.

  8. cranky-d says:

    We’re at the point that we need states to resist the Federal government. Roberts’ (I’ll stick to the grammar rules taught to me in grade school) ruling supposedly made it illegal for the government to withhold Medicaid funds to states that refuse to implement Robamacare. That’s one tact. The other could be to refuse to let the EPA shut down power plants. However it’s done, it needs doing.

    No farther.

  9. I’m a big fan of Lincoln but would have to list him ahead of FDR as our first dictator, or at least the first president to wield truly dictatorial powers. Of course he had a good reason and I believe would have been happy to relinquish these powers once the war was over. FDR eventually had WWII, but established his tyrannical tendencies well before that. Wilson probably wanted to be more of a dictator but WWI just wasn’t quite big enough.

  10. sdferr says:

    We could use an account, as opposed to a history, of the deeper recesses of the necessity of taxation. Wherewith we might come to terms with what taxation must be, and perhaps, what it mustn’t. Such accounts are out there, though I don’t know precisely where out there in order to put my hands to them.

  11. LBascom says:

    guess what I’d say is that in the end I’d be much more fearfull of an uncontrollable “commerce clause expansion” than of taxing powers.

    I’m not sure I agree, given that the expansion of taxing powers was to include inactivity. As I said before, the list of things they could tax you on used to be finite. Once not doing something became taxable, the power is truly infinite.

    Maybe I’m missing something the commerce clause lost that the new taxing authority doesn’t more than make up for.

  12. cranky-d says:

    FDR was a true micro-manager. Every day he decided what the price of gold was going to be, for instance. That’s effed up. I doubt that was his only vice.

    However, many would agree that Lincoln was our first dictator. He didn’t go as far as FDR, but I guess that’s not the issue as much as he likely overstepped his enumerated powers, and any overstepping is questionable. I don’t think he did nearly as much lasting damage, though one could easily argue that the damage done was the precedent sent by his overstepping, thus paving the way for Wilson, FDR, and Obama.

  13. BigBangHunter says:

    – Lincoln is not a good example. At the time of the civil war the Union was effectively desolved for all intents and purposes and for the duration the remaining states were effectively under Marshall law, which begs the issue as to whether or not the Constitution was even in force, the Gettysburg address not withstanding. Untill reformation was well under way, and Congress back in full session it could be argued we were not a Democratic Republic, but a sort of dictatorial monarchy.

  14. Squid says:

    …the remaining states were effectively under Marshall law…

    Wrong reconstruction.

  15. BigBangHunter says:

    – I used the word “effectively” Squid to describe the situation, not the fact.

    “I’m not sure I agree, given that the expansion of taxing powers was to include inactivity.”

    – And of course if thats where matters ended that would be a disaster. I’m looking at it from the perspective of how complex and acrimonious the “taxing” process is in Congress, and the fact that every Constitutional scholar I’ve read has said the decisions Roberts sent down will be “easily reversed without pause” in the future.

    – If thats not the case then we are screwed.

  16. cranky-d says:

    Squid, I believe, was commenting on you saying “Marshall” instead of “Martial.”

  17. BigBangHunter says:

    – I’m terrible at those sorts of transpositions. I didn’t even notice it until you pointed it out. Typical scientist I suppose.

  18. Squid says:

    For what it’s worth, I’m often accused of trying to be too clever by half.

  19. BigBangHunter says:

    I realize at times I must ‘tax’ everyones patience with my endless typos and I readily apologize. My only defense is I’m half blind and the working eye isn’t anything to write home about. On the other hand I can still root like a bulldog, and slam down a brewski like a trooper, so there’s that.

  20. sdferr says:

    Here, in Chapter 11: “Of the Extent of the Legislative Power” of John Locke’s Second Treatise is Locke’s first mention of the word ‘tax’. Locke, we know, is one among a very few of the authorities to whom the framers looked in shaping their theory of government. Let’s take him as seriously as they (which by implication means read the whole thing, in order to see the groundwork Locke performs to establish his basis):

    “Sec. 140. It is true, governments cannot be supported without great charge, and it is fit every one who enjoys his share of the protection, should pay out of his estate his proportion for the maintenance of it. But still it must be with his own consent, i.e. the consent of the majority, giving it either by themselves, or their representatives chosen by them: for if any one shall claim a power to lay and levy taxes on the people, by his own authority, and without such consent of the people, he thereby invades the fundamental law of property, and subverts the end of government: for what property have I in that, which another may by right take, when he pleases, to himself?

    Sec. 141 […]

    Sec. 142. These are the bounds which the trust, that is put in them by the society, and the law of God and nature, have set to the legislative power of every common-wealth, in all forms of government.

    First, They are to govern by promulgated established laws, not to be varied in particular cases, but to have one rule for rich and poor, for the favourite at court, and the country man at plough.

    Secondly, These laws also ought to be designed for no other end ultimately, but the good of the people.

    Thirdly, They must not raise taxes on the property of the people, without the consent of the people, given by themselves, or their deputies. And this properly concerns only such governments where the legislative is always in being, or at least where the people have not reserved any part of the legislative to deputies, to be from time to time chosen by themselves.

    Fourthly, The legislative neither must nor can transfer the power of making laws to any body else, or place it any where, but where the people have.”

  21. BigBangHunter says:

    – And from there we get the IX and X amendments.

    – All the antecedants and amendments and clauses in the world do little good however, if the ruling body chooses to igmore them, which unfortunately seems to be the trend.

  22. bh says:

    As an aside I’ve been rereading the Federalist lately and 30 through 36 deal with taxation. In a rather telling section in 34, Hamilton breaks down what governments spend money on and his answer is simple. War, he says. Other expenses are insignificant. Look at Great Britain, 14/15ths of their debt arose specifically from war and defense. (If only that was still the case!)

    It helps us to understand his vehemence in arguing the necessity of a general taxing power. The nation must be able to defend itself as a matter of survival and that is the great concern of raising revenue, he’s thinking as he mulls recent history.

  23. LBascom says:

    Wait, you mean Hamilton didn’t know about a taxes inherent power, regardless what government spends it on, to effect positive social change? Horseshit!

    No, I mean if the clueless bastard woulda thought to tax horseshit, the car probably would have been invented a hundred years earlier, am I right?

  24. BigBangHunter says:

    “….the car probably would have been invented a hundred years earlier, am I right?”

    – Yeh but it woiuldn’t have really changed things. You still wouldn’t be able to find a place to park.

  25. bh says:

    No, I mean if the clueless bastard woulda thought to tax horseshit, the car probably would have been invented a hundred years earlier, am I right?

    Cracked me up.

  26. BigBangHunter says:

    – So the House voted down ACA today by a wide margin, and yes its symbolic….for now.

    – Maybe we can drop the other shoe this November.

  27. BigBangHunter says:

    – Back when I first read the Fed papers bh, I remember that of the three things they were most concerned with, one of them stuck in my mind….Lobbying.

    – The more things change…..

  28. sdferr says:

    “. . . to govern by promulgated established laws . . . ”

    It wasn’t my intention to focus on this phrase and its implications, but what the hell — given the current raging debate over the ACA — we can ask: “Why promulgated? Why established?”

    Or in other words, why not pass the bill so we can find out what’s in it? Or why not rewrite the bill so that we can find out it’s Constitutional? Or why not write the bill so that unelected functionaries in a plethora of various agencies can simply take the legislative functions to themselves and write the bill as they see fit to administer it?

    It’s not hard to see the many violations of Locke’s notion of legitimate governance in the ACA, and consequently with the framers’ like notions. What the hell is wrong with John Roberts that he is so goddamned blind?

  29. LBascom says:

    Yeh but it woiuldn’t have really changed things. You still wouldn’t be able to find a place to park.

    I disagree. With a hundred year head start, and a tax on not driving, we’d probably have flying cars by now. That would be cool. Stupid Hamilton…

  30. BigBangHunter says:

    – Don’t know sdferr. What I do know is it would really be refreshing if the Jutices would all stop trying to be a modern day Solomon, treating every case like the “baby in half” dilemma, and just decide things in a common sense straight forward manner.

    – But that would’nt get them invited to all the right parties.

  31. LBascom says:

    Hell, we’d probably have suits like Ironman by now, zoom wherever and hang it in the closet when your done.

    Maybe congress should tax not having a closet, to expedite the whole Ironman suit wearing ideal…

  32. bh says:

    Well, if press accounts are to be believed he did so simply because he is a craven and miserable bastard, sdferr. (Which, given the extraordinary dissent and subsequent leaking, I’m ready to believe.) That is to say we don’t know that he was any blinder than your average coward. The blindness wasn’t the contributing factor. It was the fear.

  33. sdferr says:

    If I were to draw out the simple conclusion, I’m forced to say we have no legitimate government here in the US any longer. In Hobbes’ or Locke’s terms, we have already returned to a state of nature devoid of civil society. As RI Red pointed out in another thread, however inadvertently, we are in a state of war insofar as we have entered the state of nature as Hobbes and Locke understood it. War. Breitbart was not kidding.

  34. newrouter says:

    War.

    too bad one side uses a pillow and the other brass knuckles

  35. bh says:

    Yeah, I’d say recent Supreme Court decisions have finally pushed us there.

  36. LBascom says:

    I bet if they taxed everybody not using electricity, the power companies could afford to lower everyone’s rates. If fact, if there was a tax penalty on anyone not not using electricity, electricity would basically be free!

    ACA is is the killing blow.

  37. Squid says:

    So the House voted down ACA today by a wide margin, and yes its symbolic….for now.

    The framing of the dozens of attempts to undo Robamataxcare as “symbolic” is really getting on my nerves. Why can’t we ever see reporting along the lines of “Harry Reid for the 31st time today blocked debate on the health care repeal bill, in a symbolic demonstration of LALALALALALA ICANTHEARYOU ICANTHEARYOU!!! As a show of support, President Obama stated that he would veto any such bill that made its way out of the Senate anyway, in a symbolic effort to convince the electorate (and himself) that either Jugears McDowngrade or the terrible legislation that bears his name have any chance of surviving the next year.”

  38. sdferr says:

    Damned straight.

    For the 31st time, the clear demand of the people of the United States was ignored by their tyrannical overlords usurping the sovereignty which was the bedrock of American success.

    There will be hell to pay.

  39. leigh says:

    Some congresschick was on the teevee today saying that this vote was all about “scoring cheap political points.”

    For whom? Was my question. Voted down 31 times, ignored by the Senate 30 times and Harry Reid says they won’t address it this time. Whose political theatre are we talking about here? These mutherfuckers are supposed to be representin’ us, the People, not jacking around speechifying and grandstanding.

  40. newrouter says:

    baracky and co are having a hard time getting their stories straight:

    Al Sharpton announced on MSNBC tonight that Mitt Romney invited booing at the NAACP convention today merely for calling the president’s health-care law “Obamacare” — even though the Obama campaign is hawking t-shirts bearing the name.

    link

  41. dicentra says:

    I heard part of Romney’s speech to the NAACP, and it was actually pretty good.

    No pandering, no talking down to people, no fake street accent. He got more applause than boos.

  42. sdferr says:

    Pelosi: “Politics be damned”

    This woman wants political death.

  43. newrouter says:

    He got more applause than boos.

    Mitt gets a standing ovation at the NAACP

  44. newrouter says:

    This woman wants political death.

    baracky and co are a suicide cult

  45. RI Red says:

    whatchoo mean As RI Red pointed out in another thread, however inadvertently, we are in a state of war insofar as we have entered the state of nature as Hobbes and Locke understood it, inadvertantly willis, sdferr?
    I resemble that remark.
    Perhaps you were referring to the “short, brutish” thing?

  46. leigh says:

    I put this in the other thread. Here is the text of Romney’s speech.

    I also thought it was pretty good. He just laid his chips on the table, unlike Mr. Transparency.

  47. leigh says:

    Spike Lee keeps trying to gin up traction on the anti-Mormon thing. I don’t know that they’ll go there after the blow-back from attackiing the Catholic Church just months ago.

  48. sdferr says:

    “Perhaps you were referring to the “short, brutish” thing?”

    Absolutely.

  49. sdferr says:

    Locke’s version, RI Red.

  50. LBascom says:

    Morgan Freeman, bless his heart, is a one dimensional political thinker. Hasn’t made the leap to MLK heights yet But I admire his honesty.

    He’s one of those type of guy’s that inspired the old saying; “I disagree with what you say, but I’ll defend to the death your right to say it”.

    Dumb ass.

  51. newrouter says:

    Dumb ass.

    maybe but i think the bailing in july on baracky from some of his base is telling

  52. RI Red says:

    Shoot, sdferr, it’s taken me five decades plus to get here. What hope do our younguns have when so few of them would even recognize Hobbes and Locke if they bopped them in the nose?
    When I am King (term-limited, of course), there’ll be some gosh-darn reading required.

  53. McGehee says:

    Morgan Freeman raises eyebrows for saying Obama wasn’t the first black U.S. president

    This has been hanging over Obama’s head for years. Back in 2004 there were rumbles about how his black heritage isn’t American and his American heritage isn’t black.

    If he hadn’t kept winning elections he would have been thrown under the bus long ago. Morgan Almighty is playing the card now to put distance between the SCOAMFOTUS and the American black population.

  54. BT says:

    Good to hear that Mitt got that standing O at the NAACP Convention. Sounds like he spoke truth to power and they recognized it.

  55. LBascom says:

    I don’t believe Freeman is consistent in his own head about Black Americans.

    How much African blood do you need to be “black” Mr. Freeman? 50% isn’t enough, how about 75%? 90%?

    Are you telling me, if in some time in your lineage there was a cracker in the woodshed, despite self identifying as black, having family that identifies as black, and experiencing everyone else regarding you as black, you’re not necessarily black? Or authentically black?

    What a relic.

  56. LBascom says:

    By the way, I wonder how the Kenya Obamas are faring these days? Strange we never hear about them.

  57. newrouter says:

    By the way, I wonder how the Kenya Obamas are faring these days? Strange we never hear about them.

    Barack Obama’s Impoverished Half-Brother Makes Film Debut in Dinesh D‘Souza’s Anti-Obama Documentary

  58. bh says:

    Sounds like he spoke truth to power and they recognized it.

    I think he said “civil rights” and that was a well-established semantic cue to express affirmation.

  59. bh says:

    When I am King (term-limited, of course), there’ll be some gosh-darn reading required.

    I sometimes wonder how we can sell people on the pleasure to be found there if they didn’t learn this when younger because it’s the pleasure that makes learning self-perpetuating and non-coercive.

    It’s a bit like holding a strange artichoke dip in front of someone and saying, “Try this, you’ll love it.” The benefits are expansive but the prime motivator can only be discovered through experience.

    Learning is strange that way. When you smell food you want to eat it. When you see beautiful women you want to touch them. See a dusty book and you see a dusty book.

  60. BT says:

    I thought he had them when he went off script and said look at me. I’m the one going to get the 40% of black youth a shot at a job, paraphrased of course.

  61. bh says:

    My understanding is that he got the applause on the mention of his father as a civil rights supporter back in the day, BT.

    (I could be wrong.)

  62. newrouter says:

    the white mormon is down for the “struggle”

  63. happyfeet says:

    speaking of taxings National Soros Radio comes right out and says nannyfag Bloomberg’s soda fascism is *just exactly like bizarre obamawhore parenting experiments*

    Tags: Joshua Gans, children, taxes, Parenting

  64. BT says:

    Perhaps we are looking at a combination of the two. The statements followed each other. Who knows, i wasn’t there.

  65. newrouter says:

    Tags: Joshua Gans, children, taxes, Parenting

    soup?

  66. just an FYI

    If any of you’ve got yahoo account, or use a yahoo account to access flicker etc… change your password.

  67. althouse found a video of Larry Tribe making Robert’s tax argument earlier in the year. Evidently Roberts was Tribe’s student. Somebody, somewhere must have seen the window open for Roberts to satisfy his conscience.

    That might have been some good information to have focused on during the confirmation, instead of how nice his kids looked.

    Fucking Republicans.

  68. RI Red says:

    Yo, LMC! Nice day in Chicago today! Gotta write up my presentation, then I think I’ll go stimulate the economy on the Miracle Mile.

  69. Squid says:

    How much African blood do you need to be “black” Mr. Freeman? 50% isn’t enough, how about 75%? 90%?

    In Freeman’s defense, I believe his point was not related to blood, but to life experience. A life divided between Hawaiian prep schools with a typical white bank vice-president grandmother, and bouncing around the far end of the globe, is not exactly the kind of life most associated with the black experience in America.

    I mean, wasn’t the whole reason for Obama’s attendance at a black racist church to give him a little bit of credibility in the community? It sure couldn’t have been for the uplifting sermons…

  70. LBascom says:

    In Freeman’s defense, I believe his point was not related to blood, but to life experience.

    Uh-huh, sure.

    I repeat, I don’t believe Freeman is consistent in his own head about black Americans. In the article linked, dude admitted he was one that called Clinton the first black president.

    Life experience is a pretty tricky criteria. Is Angelina Jolie’s kid she adopted from Africa not black?

Comments are closed.