Also known as: taxing and spending powers · Spending Power · Taxing Power
Written by attorneys — see sources below.
A constitutional grant of authority empowering Congress to lay and collect taxes, duties, imposts, and excises and to spend the proceeds for the general welfare of the United States. The power permits Congress to attach conditions to federal grants offered to the states when those conditions are clearly stated, promote the general welfare, relate to the federal interest in the funded program, and do not induce states to violate other constitutional provisions.
Timothy Tang, the director of a state sports authority, applied for federal arena construction funds. The grant terms required the state to raise the minimum purchase age for high-proof beverages near venues and impose curfews for fans under twenty-one. The state enacted the rules to receive the money and completed the project without coercion claims arising.
Talia Torres, a university student, challenged the denial of funding for a religious magazine from mandatory student fees. The university had collected the fees under its spending authority but refused support on viewpoint grounds. The court required equal access to the collected funds for all qualifying student groups.
The University of Virginia, an instrumentality of the Commonwealth of Virginia, maintains a Student Activities Fund financed by a mandatory $14 per semester fee assessed to each full-time student. The fund supports extracurricular student activities related to the University's educational purpose through payments to third-party contractors for approved groups that qualify as Contracted Independent Organizations. To obtain CIO status, a student group must be composed primarily of University students, file its constitution, pledge nondiscrimination, and agree to a disclaimer stating that it is independent of the University. CIO publications are eligible for printing-cost reimbursement if their content is related to the University's educational purpose, but the Guidelines expressly exclude funding for any activity that primarily promotes or manifests a particular belief in or about a deity or an ultimate reality. In 1990, University of Virginia undergraduates formed Wide Awake Productions as a CIO and began publishing Wide Awake: A Christian Perspective at the University of Virginia. The first issue contained articles on racism, crisis pregnancy, prayer, C. S. Lewis, and reviews of religious music, each marked by a cross; subsequent issues addressed homosexuality, missionary work, eating disorders, and Christian theology, with advertisements from churches and Christian bookstores. In 1991, Wide Awake Productions requested $5,862 from the Student Activities Fund to cover printing costs for one issue. The Appropriations Committee of the Student Council denied the request on the ground that the publication constituted a religious activity under the Guidelines. Wide Awake Productions appealed the denial through the Student Council and the Student Activities Committee, which upheld the decision. The group and three of its student editors and members then filed suit in the United States District Court for the Western District of Virginia under 42 U.S.C. § 1983, alleging that the refusal to pay printing costs violated their rights under the First Amendment Speech, Press, and Free Exercise Clauses and the Equal Protection Clause. On cross-motions for summary judgment, the District Court ruled for the University. The United States Court of Appeals for the Fourth Circuit affirmed, and the Supreme Court granted certiorari.
View caseTracy Torres paid federal taxes and objected to a surplus property conveyance to a religious college. The transfer occurred under property authority rather than a taxing and spending measure. The court denied standing because no specific congressional appropriation was at issue.
Tanya Tang led a state agency that declined federal incentives for waste site development. The conditions required the state to take title to waste or enact specific regulations. The court held that the spending offer could not cross into direct commandeering of state legislative processes.
Low-level radioactive waste is generated by many sources and must be isolated from humans for long periods. Historically the Nation relied on a small number of disposal sites. Concern about declining disposal capacity prompted Congress initially to adopt the Low-Level Radioactive Waste Policy Act of 1980. That statute declared a federal policy that each State is responsible for providing for disposal of waste generated within its borders. It authorized States to enter into regional compacts. That Act contained no penalties for nonparticipation. By 1985, with few operational sites and a looming crisis, Congress enacted the 1985 Amendments. The amendments were based largely on proposals of the National Governors' Association. They embodied a compromise among sited and unsited States. The 1985 Act directs each State to be responsible for disposal of low-level radioactive waste generated within the State. It authorizes States to enter into interstate compacts. For an additional seven years the three existing disposal sites were required to make capacity available for waste from any source. Sited States were permitted to exact graduated surcharges on out-of-region waste. After the transition period approved compacts could exclude out-of-region waste. The Act provides three types of incentives to encourage States to comply with its requirements. The monetary incentives authorize sited States to impose surcharges on out-of-state waste. They require the Secretary of Energy to collect a portion of the surcharge into an escrow account. They permit distribution of that fund to States that achieve the statutory milestones. The access incentives authorize sited States and regional compacts to increase and ultimately deny access to their sites to waste from States that do not meet federal deadlines. The take title provision requires a State that fails to provide for disposal by January 1, 1996. Upon request of the generator or owner of waste, the State must take title to and possession of the waste and be liable for damages suffered by the generator or owner as a result of the State's failure to take possession. The petitioners, New York and two of its counties, sought a declaratory judgment that the three incentives are inconsistent with the Tenth Amendment and with the Guarantee Clause of Article IV, § 4. The District Court dismissed the complaint. The Court of Appeals affirmed.
Tobias Thomas operated a steamboat company affected by federal channel improvements funded through appropriations. The spending advanced interstate commerce interests by clearing obstructions. The court upheld the expenditure as within Congress's authority to promote general welfare through navigation projects.
In 1798 the New York Legislature granted Robert R. Livingston and Robert Fulton the exclusive right for twenty years to navigate the waters within the jurisdiction of the state with boats moved by fire or steam, a privilege later renewed and extended in 1803 and 1807. The right was assigned first to John R. Livingston and then to Aaron Ogden, who thereby claimed authority to operate steamboats between Elizabethtown, New Jersey, and New York City. Thomas Gibbons, meanwhile, took possession of two steamboats, the Stoudinger and the Bellona, which he employed in the same waters while holding a license issued under the federal Act of February 18, 1793, for enrolling and licensing vessels to be employed in the coasting trade and fisheries. Gibbons filed a bill in the Court of Chancery of New York against Ogden seeking an injunction to restrain Ogden from navigating those waters with steamboats. The bill recited the state grants and the assignment to Ogden, alleged that Ogden was violating the exclusive privilege, and prayed for injunctive relief. Gibbons answered that his vessels were duly enrolled and licensed under the 1793 federal statute and insisted on his right to navigate between Elizabethtown and New York notwithstanding the state legislation. The Chancellor awarded the injunction and, after hearing, perpetuated it on the ground that the New York acts were valid. The Court for the Trial of Impeachments and Correction of Errors, the highest court of the state to which the cause could be carried, affirmed the decree. Gibbons then appealed to the Supreme Court of the United States.
Tonya Takahashi received a federal grant for hospital construction that later faced partial cancellation. The cancellation targeted specific spending items after enactment. The court ruled the mechanism exceeded the constitutional limits on altering enacted appropriations.
In April 1996 Congress enacted the Line Item Veto Act, which took effect on January 1, 1997, and authorized the President to cancel in whole any dollar amount of discretionary budget authority, any item of new direct spending, or any limited tax benefit. On August 5, 1997, Congress passed the Balanced Budget Act of 1997, which included section 4722(c) deeming certain New York health-care-provider taxes permissible and in compliance with federal Medicaid requirements. On the same day Congress passed the Taxpayer Relief Act of 1997, which included section 968 granting a limited tax benefit allowing owners of certain food refiners and processors to defer recognition of gain when selling stock to eligible farmers' cooperatives. On August 11, 1997, President Clinton transmitted notices canceling section 4722(c) of the Balanced Budget Act and section 968 of the Taxpayer Relief Act. The City of New York, two hospital associations, one hospital, and two unions representing health-care employees filed suit challenging the cancellation of section 4722(c). Snake River Potato Growers, Inc., a farmers' cooperative formed in May 1997 to acquire potato-processing facilities, and one of its members filed a separate action challenging the cancellation of section 968. The District Court for the District of Columbia consolidated the two actions and held that at least one plaintiff in each case had Article III standing. It ruled on the merits that the cancellations did not conform to the constitutionally mandated procedures for the enactment or repeal of laws. Earlier, six Members of Congress who had voted against the Line Item Veto Act had brought a separate challenge; the District Court had held the Act unconstitutional, but the Supreme Court dismissed that action for lack of standing in Raines v. Byrd, 521 U.S. 811 (1997). After the President exercised the cancellation authority, the present appellees filed suit challenging the two cancellations, and the District Court again held the statute invalid.
Conditions must promote the general welfare, be stated unambiguously, relate to the federal interest in the funded program, and avoid inducing states to violate other constitutional provisions. Financial pressure must also remain below the level of coercion. These limits ensure states retain a meaningful choice whether to accept the funds.
Supporting sources
…of contexts, that government may execute laws or programs that adversely affect recognized economic values. Exercises of the taxing power are one obvious example. A second are the decisions in which this Court has dismissed “taking” challenges on the ground that, while the challenged government action caused economic harm, it…
…one House of Congress to have been guilty. : When Congress grants particular individuals relief or benefits under its spending power
…to the activities in which the states have traditionally engaged as marking the boundary of the restriction upon the federal taxing power. But there is no such limitation upon the plenary power
…or groups because they hold religious views abhorrent to the authorities, Fowler v. Rhode Island , 345 U. S. 67; nor employ the taxing power to inhibit the dissemination of particular religious views, Murdock v. Pennsylvania , 319 U. S. 105; Follett v. McCormick , 321 U. S. 573; cf. Grosjean v. American Press Co. , 297 U. S.…
…that one of the specific evils feared by those who drafted the Establishment Clause and fought for its adoption was that the taxing and spending power would be used to favor one religion over another or to support religion in general"). The Court, accordingly, has never before upheld direct state funding of the sort of proselytizing…
The amendment grants states substantial authority over alcohol distribution but does not bar Congress from using conditional spending to encourage related policies. Conditions tied to the federal interest in a funded program, such as arena safety, remain valid when states may decline the funds. Direct federal mandates would raise different concerns.
Supporting sources
An exaction operates as a tax when it is collected by the IRS with income tax returns, scaled to a measure of income or revenue, and capable of raising substantial revenue. The label Congress chooses does not control. Regulatory purposes do not disqualify the measure if these operational features are present.
Supporting sources
No. Conditions must bear a reasonable relationship to the federal interest in the particular program. Unrelated conditions risk invalidation because they exceed the nexus required for valid conditional spending. Courts examine the connection between the condition and the grant's objectives.
Supporting sources