 |
|
The Taxing and Spending Clause contained in Article I, Section 8, Clause 1 of the United States Constitution, grants the federal government of the United States its power of taxation. It authorizes Congress to levy taxes for two purposes: to pay the debts of the United States and to provide for the common defense and general welfare of the United States. Contained in the Taxing and Spending Clause are two additional clauses: the General Welfare Clause and the Uniformity Clause.
The Congress shall have Power To lay and collect Taxes, Duties, Imposts (form of tax) 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;
The Articles of Confederation (1781–1789) did not grant the central government the power to levy taxes. Only the states had this power. Congress could get money only by asking the states for funds. They could also borrow money from foreign governments or sell off western lands. This was designed to keep a weak central government with the majority of the governing powers reserved for the independent states. Congress had no revenues to pay its debts or to enforce its laws and treaties. This was one of the issues taken up by the Constitutional Convention in 1787 and changed in the Constitution.
The power of Congress to levy taxes has an exception and two qualifications in the Constitution. Any goods exported from any state may not be taxed. Direct taxes must follow the rule of apportionment
The power granted to “provide . . . for the general welfare” is granted by the Constitution. In 1791 Thomas Jefferson wrote:
To lay taxes to provide for the general welfare of the United States, that is to say, “to lay taxes for the purpose of providing for the general welfare.” For the laying of taxes is the power, and the general welfare the purpose for which the power is to be exercised. They are not to lay taxes ad libitum for any purpose they please; but only to pay the debts or provide for the welfare of the Union. In like manner, they are not to do anything they please to provide for the general welfare, but only to lay taxes for that purpose...
He was writing about the constitutionality of having a national bank. Here he was making the point that the clause was not an independent power granted to Congress, but was intended to qualify that taxing power. The Supreme Court has not since had any occasion to make a formal ruling on the point.
There was a different of opinion on the meaning of “the general welfare” between the two authors of this clause. Alexander Hamilton adopted a very plain view that the clause meant just what it said. The general welfare meant for every citizen's benefit. James Madison took a more limited view. He believed the clause gave Congress the power of taxation just to support itself and remain in power. Congress has followed Hamilton's view from the start. They have made increasing appropriations for spending for the general welfare often requiring matching funds from the states.
Indirect taxes are subject to the rule of uniformity. This states "all Duties, Imposts and Excises shall be uniform throughout the United States". At first, the Supreme court declared that a tax is uniform "if it "operates with the same force and effect in every place where the subject of it is found." In United States v. Ptasynski (1983), the Court concluded unanimously that any tax in which the subject is defined in non-geographic terms satisfies the Uniformity Clause. Secondly, where a subject is defined geographically, the tax needs to carefully look for any "actual geographic discrimination."
Associate Justice Joseph Story
