1. Taxing and Spending Clause

2. Art I, Sec. 8, Clause 1 The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States

3. Two types of tax in original Constitution Indirect taxes: Allowed if uniform Includes: customs duties, excises or imposts Direct taxes: Must be apportioned among states on basis of population Includes: head taxes, property taxes

4. Springer v. U.S. (1881) Challenge to temporary income tax during Civil War Question was whether this was direct federal tax, rather than properly apportioned among the states Court unanimously find that prohibition on direct taxes only applied to head taxes & property taxes levied on land

5. Pollock v. Farmers Loan (1895) 1894 – first peacetime income tax, flat 2% on incomes over $4k (top 3% of population) Pollock sues own bank to prevent them from paying tax Pollock’s atty argues that tax on income from property is first step on road to communal ownership of property

6. Pollock v. Farmers Loan (1895) Major argument: Is tax on income from property the same as a tax on property – the kind of direct tax prohibited by original Constitution?

7. 16 th Amendment The 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.

8. McCray v. U.S. (1904) U.S. taxed colored oleomargarine at higher rate than uncolored (supposedly to prevent resale as butter) Court upheld tax as deference to Congress’ ability to regulate for purposes such as preventing fraud in commercial transactions

9. Bailey v. Drexel Furniture (1922) Following Sup Ct’s decision in Hammer v. Dagenhart, Congress passes tax on all items made with child labor passing in interstate commerce Tax seen as serving same purpose as in McCray, equalizing costs, cutting incentive to hire children

10. Bailey v. Drexel Furniture (1922) Court strikes down Child Labor Tax Act, saying that tax goes beyond “incidental restraint and regulation” and so has a “prohibitory and regulatory effect”

11. Steward Machine v. Davis (1937) Employers of 8 or more required to pay federal unemployment insurance Taxes paid to state unemployment plans credited so long as state plans met federal standards

12. Steward Machine v. Davis (1937) Cardozo notes, from 1929-1936: Average of 10 million unemployed Peak of > 16 million unemployed States ran out of relief dollars

13. Steward Machine v. Davis (1937) “Every tax is in some measure regulatory. To some extent it interposes an economic impediment to the activity taxed as compared with others not taxed.” Citing Sonzinsky v. U.S. (1937) (firearms tax case)

14. Helvering v. Davis (1937) Companion case to Steward Machine, concerned old age and survivors benefits portions of Social Security Key challenge: states had traditionally provided such welfare benefits Cardozo notes impossibility of such during “national calamity” of Great Depression

15. U.S. v. Kahriger (1953) Gamblers’ Occupational Tax Act of 1951 requires registration as a professional gambler Kahriger argues that gambling properly regulated as moral issue by states and registration violates 5 th Amendment right against self- incrimination

16. U.S. v. Kahriger (1953) From majority opinion: “the instant tax has a regulatory effect. But regardless of its regulatory effect, the wagering tax produces revenue.”

17. South Dakota v. Dole (1987) 21 st Amendment gives states power to regulate alcohol sales Different minimum ages in states gave 18-20 year olds reasons to cross state lines to find alcohol Congress conditions highway funding on state adoption of uniform 21 year old minimum drinking age

18. South Dakota v. Dole (1987) Rehnquist defines four conditions: 1.Spending must be in “general Welfare” (w/ usual deference to Congress one assumes) 2.Conditions for receipt must be “unambiguous” and clearly stated so states can “exercise their choice knowingly)

19. South Dakota v. Dole (1987) Rehnquist defines four conditions: 3. Related “to the federal interest in particular national projects or programs” 4. No other constitutional provision independently bars such conditional grants

20. Should We Tax Fattening Foods?: A Quick Argument For Taxing High Fructose Corn Syrup

21. Obesity Rates in U.S. - 1990

22. Obesity Rates in U.S. - 2009

24. Estimated diabetes costs in the United States in 2007 Total Cost: $174 billion Direct medical costs: $116 billion Indirect costs: $58 billion (disability, work loss, premature mortality) Source: Centers for Disease Control