Kirsten Salois, Andrew Carpino, Alexander Malm, Timothy Rose Taxes Kirsten Salois, Andrew Carpino, Alexander Malm, Timothy Rose

Taxing for the General Welfare 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 interpreted as granting the state broad power to legislate or regulate for the general welfare that is independent of other powers specified in the governing document

U.S. V Butler (1936) Struck down AAA (Agricultural Adjustment Act). Madison interprets “general welfare” as constitutional duties of congress. Hamilton interprets “general welfare” as welfare of the people of the US. (Adopted by court). -While this case strikes down The Agricultural Adjustment Act as a violation of the 10th amendment (Any power not granted to federal government nor prohibited to states are reserved to states), the case does recognize a broader construction on the idea of taxing and spending for the general welfare of the United States. -Madison had interpreted the idea of the phrase “General welfare” to state that it means that taxes are only to be laid by the congress in order to carry out the powers enumerated to it by the constitution (I.E. raising and maintaining an army, declaring war, paying debts, etc.) -Hamilton, on the other hand, interpreted the phrase “general welfare” as meaning that the congress can lay down taxes to provide for the general welfare of the United States (i.e. unemployment relief, public education and healthcare, etc.) so long as the taxes themselves do not violate the constitution.  (this interpretation was adopted by the court.)

Steward Machine v. Davis (1937) Allows for the laying of a tax (excise) on businesses consisting of eight or more employees in order to provide unemployment relief for the United States (so long as such as tax is geographically uniform) Includes Unemployment relief as a part of providing for the General Welfare of the United States. States may join a collective to provide for unemployment relief, so long as they are free to leave at any time. -Congress is allowed to lay an excise on businesses of eight or more employees in order to raise funds to provide for the unemployment relief of the United States so long as the the excise is geographically uniform across the entire nation. - Unemployment relief becomes recognized as part of providing for the general welfare of the United States. - In addition to this, states may enter into a collective agreement to raise funds through taxes and place the revenues, in the form of a deposit, into the US treasury in order to provide for unemployment relief throughout the entire nation so long as the states are free to leave at any time without the fear of losing something (I.E. in this case, they may back out of the collective at any time, retrieve the deposit placed in the US treasury at any time, and return to the same status they were at before joining the collective (for example, they cannot be forced to pay a fine as a penalty for backing out of the collective, nor can they be forced to suffer from any penalty (for instance, be cut off from funding they were entitled to prior to entering into the collective) for leaving the collective)).

Helvering v Davis (1937) A employer is merely a withholding agent with respect to the employee tax, neither an employee or employer may ask for relief from the employee tax lays foundation that people can not get away from paying certain taxes that go to the general treasurery

Direct Taxes Article I, section 9 "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." Because of that apportionment requirement, application of "direct tax" as it related to specific taxes has been considered by the Supreme Court in the 18th, 19th, and 20th centuries, led to the adoption of the 16th Amendment. 16th Amendment: 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.

Hylton v. US (1796) Taxation on goods is not a direct tax Case lead to the expansion of sales tax Also lead to business related taxes In this case Supreme Court first tackled direct tax issue,  The carriage tax was not apportionable because apportionment would lead to absurd results, 

Veazie Bank v. Fenno (1869) Act: "That every National Banking association, State bank, or State banking association, shall pay a tax of ten per centum on the amount of notes of any person, State bank, or State banking association, used for circulation and paid out by them after the 1st day of August, 1866, and such tax shall be assessed and paid in such manner as shall be prescribed by the Commissioner of Internal Revenue." The court reasoned that the Constitution from which the people ratified and agreed upon grants Congress the right to provide revenue by the taxation of persons and property taxation which Congress is implementing must uniform throughout the United States Originally the bank declined to pay the tax claiming the act to be unconstitutional because it was a collector of internal revenue. The tax was paid in order to avoid penalty costs. Court in their reasoning quote Adam Smith (the first comprehensive treatise on political economy in the English language) in their attempt to define direct tax but he concluded that the constitution lists nothing of value for the characteristics of a direct tax. Not a direct tax, only taxes on people or land is considered a direct tax, so therefore this tax did not need to be apportioned but in fact uniformed. Eliminated private currency.  Chief Justice Chase pointed out that Congress never considered taxes on personal property, contracts, or occupations to be direct taxes, Congress understood direct taxes to be limited to taxes on land and improvements, and capitations.

Springer v. US (1880) Spring refused to pay income tax and as a result his property was seized and sold The Federal income tax imposed under the Revenue Act of 1864 was constitutional.   Alexander Hamilton saying; "Those of the direct kind, which principally relate to land and buildings, may admit of a rule of apportionment. Either the value of the land, or the number of the people, may serve as a standard.” was the tax a direct tax because it was not apportioned among the states. The income tax was not a direct tax because; Justice Swayne, writing for the Court, concluded that direct taxes, within the meaning of the Constitution's text, include only capitations and taxes on real property; therefore, the income tax was not a direct tax. It will not be until Pollock v. Farmer’s Loan & Trust Co. (1895)​ that income tax is a direct tax 

Pollock v. Farmer’s Loan & Trust Co. (1895) Wilson-Gorman Tariff Act of 1894 imposed a 2% income tax on any revenue over $4,000 generated by persons or corporations Massachusetts citizen Charles Pollock sued Farmer's Loan and Trust in order to keep them from paying the tax Pollock argued that the act was unconstitutional because the federal government did not have the right to impose unapportioned taxes The Supreme Court ruled that the unapportioned taxes that the Wilson- Gorman Tariff Act imposed were unconstitutional Congress in 1894 enacted an income tax, Chief Justice Melville Fuller delivered the opinion of the Court. In his view, the purpose of the inquiry was to find the meaning of direct tax when the Constitution was framed in Philadelphia and ratified by the states, The Court confirmed that a tax on rental income from real property was a direct tax. The Court also ruled that a tax on income generated by personal property was a direct tax, first case in where income would become a direct tax.declared certain taxes on incomes — such as those on property under the 1894 Act — to be unconstitutionally unapportioned direct taxes. The Court reasoned that a tax on income from property should be treated as a tax on "property by reason of its ownership" and so should be required to be apportioned, After Pollock, while income taxes on wages (as indirect taxes) were still not required to be apportioned by population, taxes on interest, dividends, and rental income were required to be apportioned by population

Flint v. Stone Tracy Co. (1911) In 1909, Congress passed the Corporation Tax Act that imposed a 1% tax on any revenue over $5,000 that a corporation generated Stella Flint, the custodian of Samuel N. Stone's estate, argued that incorporating a company was a state function, and therefore could only be taxed by the state The Supreme Court ruled that operating in corporation form is a privilege, and therefore is eligible to be taxed by the federal government The Court reasoned that the tax was an excise tax, not a direct tax, and therefore was legal under Article I of the Constitution