Funny things happen. Mostly in US constitution
. Linguistic gymnastics.
I love America. Everything American. US constitution, excluded. US politics, excluded. US style democracy, excluded. US jingoism, excluded. US war mongering, excluded. US penchant to mess with foreign countries, native, Oops, nascent religious and cultural nuances, excluded. US Military-Indistrial Complex(ity), excluded. US, so called, exceptionalism, excluded. I am running out of my choices of expletives.
Let me get outta here before them rascal Republicans, Oops, gun toting, rootin' tootin' hootin' hollering skinheads and rednecks shoot me dead.
Try. I ain't going nowhere, cuz, I love America.
...and I am Sid Harth@webworldismyoyster.com
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The Constitution is presented in several ways on this site. This page presents the Constitution on one large HTML-enhanced page. Other pages present the Constitution as a series of individual pages, in plain text, in standard Palm DOC format, and in enhanced TealDoc format. A quick reference is also available, as are photos of the Constitution. The Constitution of China is available for comparison.
In these pages, superseded text is presented like this: (This is superseded text.) Added text that is not a part of the Constitution is presented like this: (This is added text.)
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- Article 1 - The Legislative Branch
- Section 1 - The Legislature
- Section 2 - The House
- Section 3 - The Senate
- Section 4 - Elections, Meetings
- Section 5 - Membership, Rules, Journals, Adjournment
- Section 6 - Compensation
- Section 7 - Revenue Bills, Legislative Process, Presidential Veto
- Section 8 - Powers of Congress
- Section 9 - Limits on Congress
- Section 10 - Powers Prohibited of States
- Article 2 - The Executive Branch
- Article 3 - The Judicial Branch
- Article 4 - The States
- Article 5 - Amendment
- Article 6 - Debts, Supremacy, Oaths
- Article 7 - Ratification
- Amendment 1 - Freedom of Religion, Press, Expression
- Amendment 2 - Right to Bear Arms
- Amendment 3 - Quartering of Soldiers
- Amendment 4 - Search and Seizure
- Amendment 5 - Trial and Punishment, Compensation for Takings
- Amendment 6 - Right to Speedy Trial, Confrontation of Witnesses
- Amendment 7 - Trial by Jury in Civil Cases
- Amendment 8 - Cruel and Unusual Punishment
- Amendment 9 - Construction of Constitution
- Amendment 10 - Powers of the States and People
- Amendment 11 - Judicial Limits
- Amendment 12 - Choosing the President, Vice President
- Amendment 13 - Slavery Abolished
- Amendment 14 - Citizenship Rights
- Amendment 15 - Race No Bar to Vote
- Amendment 16 - Status of Income Tax Clarified
- Amendment 17 - Senators Elected by Popular Vote
- Amendment 18 - Liquor Abolished
- Amendment 19 - Women's Suffrage
- Amendment 20 - Presidential, Congressional Terms
- Amendment 21 - Amendment 18 Repealed
- Amendment 22 - Presidential Term Limits
- Amendment 23 - Presidential Vote for District of Columbia
- Amendment 24 - Poll Taxes Barred
- Amendment 25 - Presidential Disability and Succession
- Amendment 26 - Voting Age Set to 18 Years
- Amendment 27 - Limiting Changes to Congressional Pay
The Constitution of the United States
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.
Section 1 - The Legislature
All legislative Powers herein granted shall be vested in a Congress of the United States, which shall consist of a Senate and House of Representatives.
Section 2 - The House
The House of Representatives shall be composed of Members chosen every second Year by the People of the several States, and the Electors in each State shall have the Qualifications requisite for Electors of the most numerous Branch of the State Legislature.
No Person shall be a Representative who shall not have attained to the Age of twenty five Years, and been seven Years a Citizen of the United States, and who shall not, when elected, be an Inhabitant of that State in which he shall be chosen.
(Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.) (The previous sentence in parentheses was modified by the 14th Amendment, section 2.) The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct. The Number of Representatives shall not exceed one for every thirty Thousand, but each State shall have at Least one Representative; and until such enumeration shall be made, the State of New Hampshire shall be entitled to chuse three, Massachusetts eight, Rhode Island and Providence Plantations one, Connecticut five, New York six, New Jersey four, Pennsylvania eight, Delaware one, Maryland six, Virginia ten, North Carolina five, South Carolina five and Georgia three.
When vacancies happen in the Representation from any State, the Executive Authority thereof shall issue Writs of Election to fill such Vacancies.
Section 3 - The Senate
The Senate of the United States shall be composed of two Senators from each State, (chosen by the Legislature thereof,) (The preceding words in parentheses superseded by 17th Amendment, section 1.) for six Years; and each Senator shall have one Vote.
Immediately after they shall be assembled in Consequence of the first Election, they shall be divided as equally as may be into three Classes. The Seats of the Senators of the first Class shall be vacated at the Expiration of the second Year, of the second Class at the Expiration of the fourth Year, and of the third Class at the Expiration of the sixth Year, so that one third may be chosen every second Year; (and if Vacancies happen by Resignation, or otherwise, during the Recess of the Legislature of any State, the Executive thereof may make temporary Appointments until the next Meeting of the Legislature, which shall then fill such Vacancies.) (The preceding words in parentheses were superseded by the 17th Amendment, section 2.)
No person shall be a Senator who shall not have attained to the Age of thirty Years, and been nine Years a Citizen of the United States, and who shall not, when elected, be an Inhabitant of that State for which he shall be chosen.
The Vice President of the United States shall be President of the Senate, but shall have no Vote, unless they be equally divided.
The Senate shall have the sole Power to try all Impeachments. When sitting for that Purpose, they shall be on Oath or Affirmation. When the President of the United States is tried, the Chief Justice shall preside: And no Person shall be convicted without the Concurrence of two thirds of the Members present.
Judgment in Cases of Impeachment shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust or Profit under the United States: but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment and Punishment, according to Law.
Section 4 - Elections, Meetings
The Times, Places and Manner of holding Elections for Senators and Representatives, shall be prescribed in each State by the Legislature thereof; but the Congress may at any time by Law make or alter such Regulations, except as to the Place of Chusing Senators.
The Congress shall assemble at least once in every Year, and such Meeting shall (be on the first Monday in December,) (The preceding words in parentheses were superseded by the 20th Amendment, section 2.) unless they shall by Law appoint a different Day.
Each House shall be the Judge of the Elections, Returns and Qualifications of its own Members, and a Majority of each shall constitute a Quorum to do Business; but a smaller number may adjourn from day to day, and may be authorized to compel the Attendance of absent Members, in such Manner, and under such Penalties as each House may provide.
Each House may determine the Rules of its Proceedings, punish its Members for disorderly Behavior, and, with the Concurrence of two-thirds, expel a Member.
Each House shall keep a Journal of its Proceedings, and from time to time publish the same, excepting such Parts as may in their Judgment require Secrecy; and the Yeas and Nays of the Members of either House on any question shall, at the Desire of one fifth of those Present, be entered on the Journal.
Neither House, during the Session of Congress, shall, without the Consent of the other, adjourn for more than three days, nor to any other Place than that in which the two Houses shall be sitting.
Section 6 - Compensation
(The Senators and Representatives shall receive a Compensation for their Services, to be ascertained by Law, and paid out of the Treasury of the United States.) (The preceding words in parentheses were modified by the 27th Amendment.) They shall in all Cases, except Treason, Felony and Breach of the Peace, be privileged from Arrest during their Attendance at the Session of their respective Houses, and in going to and returning from the same; and for any Speech or Debate in either House, they shall not be questioned in any other Place.
No Senator or Representative shall, during the Time for which he was elected, be appointed to any civil Office under the Authority of the United States which shall have been created, or the Emoluments whereof shall have been increased during such time; and no Person holding any Office under the United States, shall be a Member of either House during his Continuance in Office.
Section 7 - Revenue Bills, Legislative Process, Presidential Veto
All bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.
Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States; If he approve he shall sign it, but if not he shall return it, with his Objections to that House in which it shall have originated, who shall enter the Objections at large on their Journal, and proceed to reconsider it. If after such Reconsideration two thirds of that House shall agree to pass the Bill, it shall be sent, together with the Objections, to the other House, by which it shall likewise be reconsidered, and if approved by two thirds of that House, it shall become a Law. But in all such Cases the Votes of both Houses shall be determined by Yeas and Nays, and the Names of the Persons voting for and against the Bill shall be entered on the Journal of each House respectively. If any Bill shall not be returned by the President within ten Days (Sundays excepted) after it shall have been presented to him, the Same shall be a Law, in like Manner as if he had signed it, unless the Congress by their Adjournment prevent its Return, in which Case it shall not be a Law.
Every Order, Resolution, or Vote to which the Concurrence of the Senate and House of Representatives may be necessary (except on a question of Adjournment) shall be presented to the President of the United States; and before the Same shall take Effect, shall be approved by him, or being disapproved by him, shall be repassed by two thirds of the Senate and House of Representatives, according to the Rules and Limitations prescribed in the Case of a Bill.
Section 8 - Powers of Congress
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;
To borrow money on the credit of the United States;
To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;
To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;
To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;
To establish Post Offices and Post Roads;
To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;
To constitute Tribunals inferior to the supreme Court;
To define and punish Piracies and Felonies committed on the high Seas, and Offenses against the Law of Nations;
To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;
To provide and maintain a Navy;
To make Rules for the Government and Regulation of the land and naval Forces;
To provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions;
To provide for organizing, arming, and disciplining, the Militia, and for governing such Part of them as may be employed in the Service of the United States, reserving to the States respectively, the Appointment of the Officers, and the Authority of training the Militia according to the discipline prescribed by Congress;
To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; And
To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.
Section 9 - Limits on Congress
The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person.
The privilege of the Writ of Habeas Corpus shall not be suspended, unless when in Cases of Rebellion or Invasion the public Safety may require it.
No Tax or Duty shall be laid on Articles exported from any State.
No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.
No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.
No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State.
Section 10 - Powers prohibited of States
No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
No State shall, without the Consent of Congress, lay any duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.
Article II - The Executive Branch Note
The executive Power shall be vested in a President of the United States of America. He shall hold his Office during the Term of four Years, and, together with the Vice-President chosen for the same Term, be elected, as follows:
Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress: but no Senator or Representative, or Person holding an Office of Trust or Profit under the United States, shall be appointed an Elector.
(The Electors shall meet in their respective States, and vote by Ballot for two persons, of whom one at least shall not lie an Inhabitant of the same State with themselves. And they shall make a List of all the Persons voted for, and of the Number of Votes for each; which List they shall sign and certify, and transmit sealed to the Seat of the Government of the United States, directed to the President of the Senate. The President of the Senate shall, in the Presence of the Senate and House of Representatives, open all the Certificates, and the Votes shall then be counted. The Person having the greatest Number of Votes shall be the President, if such Number be a Majority of the whole Number of Electors appointed; and if there be more than one who have such Majority, and have an equal Number of Votes, then the House of Representatives shall immediately chuse by Ballot one of them for President; and if no Person have a Majority, then from the five highest on the List the said House shall in like Manner chuse the President. But in chusing the President, the Votes shall be taken by States, the Representation from each State having one Vote; a quorum for this Purpose shall consist of a Member or Members from two-thirds of the States, and a Majority of all the States shall be necessary to a Choice. In every Case, after the Choice of the President, the Person having the greatest Number of Votes of the Electors shall be the Vice President. But if there should remain two or more who have equal Votes, the Senate shall chuse from them by Ballot the Vice-President.) (This clause in parentheses was superseded by the 12th Amendment.)
The Congress may determine the Time of chusing the Electors, and the Day on which they shall give their Votes; which Day shall be the same throughout the United States.
No person except a natural born Citizen, or a Citizen of the United States, at the time of the Adoption of this Constitution, shall be eligible to the Office of President; neither shall any Person be eligible to that Office who shall not have attained to the Age of thirty-five Years, and been fourteen Years a Resident within the United States.
(In Case of the Removal of the President from Office, or of his Death, Resignation, or Inability to discharge the Powers and Duties of the said Office, the same shall devolve on the Vice President, and the Congress may by Law provide for the Case of Removal, Death, Resignation or Inability, both of the President and Vice President, declaring what Officer shall then act as President, and such Officer shall act accordingly, until the Disability be removed, or a President shall be elected.) (This clause in parentheses has been modified by the 20th and 25th Amendments.)
The President shall, at stated Times, receive for his Services, a Compensation, which shall neither be increased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.
Before he enter on the Execution of his Office, he shall take the following Oath or Affirmation:
"I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my Ability, preserve, protect and defend the Constitution of the United States."
Section 2 - Civilian Power over Military, Cabinet, Pardon Power, Appointments
The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States; he may require the Opinion, in writing, of the principal Officer in each of the executive Departments, upon any subject relating to the Duties of their respective Offices, and he shall have Power to Grant Reprieves and Pardons for Offenses against the United States, except in Cases of Impeachment.
He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.
The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.
Section 3 - State of the Union, Convening Congress
He shall from time to time give to the Congress Information of the State of the Union, and recommend to their Consideration such Measures as he shall judge necessary and expedient; he may, on extraordinary Occasions, convene both Houses, or either of them, and in Case of Disagreement between them, with Respect to the Time of Adjournment, he may adjourn them to such Time as he shall think proper; he shall receive Ambassadors and other public Ministers; he shall take Care that the Laws be faithfully executed, and shall Commission all the Officers of the United States.
Section 4 - Disqualification
Article III - The Judicial Branch Note
Section 1 - Judicial powers
The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behavior, and shall, at stated Times, receive for their Services a Compensation which shall not be diminished during their Continuance in Office.
Section 2 - Trial by Jury, Original Jurisdiction, Jury Trials
(The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority; to all Cases affecting Ambassadors, other public Ministers and Consuls; to all Cases of admiralty and maritime Jurisdiction; to Controversies to which the United States shall be a Party; to Controversies between two or more States; between a State and Citizens of another State; between Citizens of different States; between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.) (This section in parentheses is modified by the 11th Amendment.)
In all Cases affecting Ambassadors, other public Ministers and Consuls, and those in which a State shall be Party, the supreme Court shall have original Jurisdiction. In all the other Cases before mentioned, the supreme Court shall have appellate Jurisdiction, both as to Law and Fact, with such Exceptions, and under such Regulations as the Congress shall make.
The Trial of all Crimes, except in Cases of Impeachment, shall be by Jury; and such Trial shall be held in the State where the said Crimes shall have been committed; but when not committed within any State, the Trial shall be at such Place or Places as the Congress may by Law have directed.
Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.
Article IV - The States
Section 1 - Each State to Honor all others
Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may by general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof.
Section 2 - State citizens, Extradition
The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.
A Person charged in any State with Treason, Felony, or other Crime, who shall flee from Justice, and be found in another State, shall on demand of the executive Authority of the State from which he fled, be delivered up, to be removed to the State having Jurisdiction of the Crime.
(No Person held to Service or Labour in one State, under the Laws thereof, escaping into another, shall, in Consequence of any Law or Regulation therein, be discharged from such Service or Labour, But shall be delivered up on Claim of the Party to whom such Service or Labour may be due.) (This clause in parentheses is superseded by the 13th Amendment.)
Section 3 - New States
New States may be admitted by the Congress into this Union; but no new States shall be formed or erected within the Jurisdiction of any other State; nor any State be formed by the Junction of two or more States, or parts of States, without the Consent of the Legislatures of the States concerned as well as of the Congress.
The Congress shall have Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States; and nothing in this Constitution shall be so construed as to Prejudice any Claims of the United States, or of any particular State.
Section 4 - Republican government
The United States shall guarantee to every State in this Union a Republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the Legislature cannot be convened) against domestic Violence.
The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as part of this Constitution, when ratified by the Legislatures of three fourths of the several States, or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress; Provided that no Amendment which may be made prior to the Year One thousand eight hundred and eight shall in any Manner affect the first and fourth Clauses in the Ninth Section of the first Article; and that no State, without its Consent, shall be deprived of its equal Suffrage in the Senate.
Article VI - Debts, Supremacy, Oaths
All Debts contracted and Engagements entered into, before the Adoption of this Constitution, shall be as valid against the United States under this Constitution, as under the Confederation.
This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
The Senators and Representatives before mentioned, and the Members of the several State Legislatures, and all executive and judicial Officers, both of the United States and of the several States, shall be bound by Oath or Affirmation, to support this Constitution; but no religious Test shall ever be required as a Qualification to any Office or public Trust under the United States.
Article VII - Ratification Documents
The Ratification of the Conventions of nine States, shall be sufficient for the Establishment of this Constitution between the States so ratifying the Same.
Done in Convention by the Unanimous Consent of the States present the Seventeenth Day of September in the Year of our Lord one thousand seven hundred and Eighty seven and of the Independence of the United States of America the Twelfth. In Witness whereof We have hereunto subscribed our Names. Note
Go Washington - President and deputy from Virginia
New Hampshire - John Langdon, Nicholas Gilman
Massachusetts - Nathaniel Gorham, Rufus King
Connecticut - Wm Saml Johnson, Roger Sherman
New York - Alexander Hamilton
New Jersey - Wil Livingston, David Brearley, Wm Paterson, Jona. Dayton
Pensylvania - B Franklin, Thomas Mifflin, Robt Morris, Geo. Clymer, Thos FitzSimons, Jared Ingersoll, James Wilson, Gouv Morris
Delaware - Geo. Read, Gunning Bedford jun, John Dickinson, Richard Bassett, Jaco. Broom
Maryland - James McHenry, Dan of St Tho Jenifer, Danl Carroll
Virginia - John Blair, James Madison Jr.
North Carolina - Wm Blount, Richd Dobbs Spaight, Hu Williamson
South Carolina - J. Rutledge, Charles Cotesworth Pinckney, Charles Pinckney, Pierce Butler
Georgia - William Few, Abr Baldwin
Attest: William Jackson, Secretary
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.
No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.
In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.
In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.
Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.
The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.
The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.
The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
The Electors shall meet in their respective states, and vote by ballot for President and Vice-President, one of whom, at least, shall not be an inhabitant of the same state with themselves; they shall name in their ballots the person voted for as President, and in distinct ballots the person voted for as Vice-President, and they shall make distinct lists of all persons voted for as President, and of all persons voted for as Vice-President and of the number of votes for each, which lists they shall sign and certify, and transmit sealed to the seat of the government of the United States, directed to the President of the Senate;
The President of the Senate shall, in the presence of the Senate and House of Representatives, open all the certificates and the votes shall then be counted;
The person having the greatest Number of votes for President, shall be the President, if such number be a majority of the whole number of Electors appointed; and if no person have such majority, then from the persons having the highest numbers not exceeding three on the list of those voted for as President, the House of Representatives shall choose immediately, by ballot, the President. But in choosing the President, the votes shall be taken by states, the representation from each state having one vote; a quorum for this purpose shall consist of a member or members from two-thirds of the states, and a majority of all the states shall be necessary to a choice. And if the House of Representatives shall not choose a President whenever the right of choice shall devolve upon them, before the fourth day of March next following, then the Vice-President shall act as President, as in the case of the death or other constitutional disability of the President.
The person having the greatest number of votes as Vice-President, shall be the Vice-President, if such number be a majority of the whole number of Electors appointed, and if no person have a majority, then from the two highest numbers on the list, the Senate shall choose the Vice-President; a quorum for the purpose shall consist of two-thirds of the whole number of Senators, and a majority of the whole number shall be necessary to a choice. But no person constitutionally ineligible to the office of President shall be eligible to that of Vice-President of the United States.
1. Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction.
2. Congress shall have power to enforce this article by appropriate legislation.
1. All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
2. Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice-President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.
3. No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.
4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.
5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.
1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude.
2. The Congress shall have power to enforce this article by appropriate legislation.
The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures.
When vacancies happen in the representation of any State in the Senate, the executive authority of such State shall issue writs of election to fill such vacancies: Provided, That the legislature of any State may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct.
This amendment shall not be so construed as to affect the election or term of any Senator chosen before it becomes valid as part of the Constitution.
1. After one year from the ratification of this article the manufacture, sale, or transportation of intoxicating liquors within, the importation thereof into, or the exportation thereof from the United States and all territory subject to the jurisdiction thereof for beverage purposes is hereby prohibited.
2. The Congress and the several States shall have concurrent power to enforce this article by appropriate legislation.
3. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.
The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of sex.
Congress shall have power to enforce this article by appropriate legislation.
1. The terms of the President and Vice President shall end at noon on the 20th day of January, and the terms of Senators and Representatives at noon on the 3d day of January, of the years in which such terms would have ended if this article had not been ratified; and the terms of their successors shall then begin.
2. The Congress shall assemble at least once in every year, and such meeting shall begin at noon on the 3d day of January, unless they shall by law appoint a different day.
3. If, at the time fixed for the beginning of the term of the President, the President elect shall have died, the Vice President elect shall become President. If a President shall not have been chosen before the time fixed for the beginning of his term, or if the President elect shall have failed to qualify, then the Vice President elect shall act as President until a President shall have qualified; and the Congress may by law provide for the case wherein neither a President elect nor a Vice President elect shall have qualified, declaring who shall then act as President, or the manner in which one who is to act shall be selected, and such person shall act accordingly until a President or Vice President shall have qualified.
4. The Congress may by law provide for the case of the death of any of the persons from whom the House of Representatives may choose a President whenever the right of choice shall have devolved upon them, and for the case of the death of any of the persons from whom the Senate may choose a Vice President whenever the right of choice shall have devolved upon them.
5. Sections 1 and 2 shall take effect on the 15th day of October following the ratification of this article.
6. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of three-fourths of the several States within seven years from the date of its submission.
1. The eighteenth article of amendment to the Constitution of the United States is hereby repealed.
2. The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.
3. The article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by conventions in the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.
1. No person shall be elected to the office of the President more than twice, and no person who has held the office of President, or acted as President, for more than two years of a term to which some other person was elected President shall be elected to the office of the President more than once. But this Article shall not apply to any person holding the office of President, when this Article was proposed by the Congress, and shall not prevent any person who may be holding the office of President, or acting as President, during the term within which this Article becomes operative from holding the office of President or acting as President during the remainder of such term.
2. This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by the legislatures of three-fourths of the several States within seven years from the date of its submission to the States by the Congress.
1. The District constituting the seat of Government of the United States shall appoint in such manner as the Congress may direct: A number of electors of President and Vice President equal to the whole number of Senators and Representatives in Congress to which the District would be entitled if it were a State, but in no event more than the least populous State; they shall be in addition to those appointed by the States, but they shall be considered, for the purposes of the election of President and Vice President, to be electors appointed by a State; and they shall meet in the District and perform such duties as provided by the twelfth article of amendment.
2. The Congress shall have power to enforce this article by appropriate legislation.
1. The right of citizens of the United States to vote in any primary or other election for President or Vice President, for electors for President or Vice President, or for Senator or Representative in Congress, shall not be denied or abridged by the United States or any State by reason of failure to pay any poll tax or other tax.
2. The Congress shall have power to enforce this article by appropriate legislation.
1. In case of the removal of the President from office or of his death or resignation, the Vice President shall become President.
2. Whenever there is a vacancy in the office of the Vice President, the President shall nominate a Vice President who shall take office upon confirmation by a majority vote of both Houses of Congress.
3. Whenever the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that he is unable to discharge the powers and duties of his office, and until he transmits to them a written declaration to the contrary, such powers and duties shall be discharged by the Vice President as Acting President.
4. Whenever the Vice President and a majority of either the principal officers of the executive departments or of such other body as Congress may by law provide, transmit to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office, the Vice President shall immediately assume the powers and duties of the office as Acting President.
Thereafter, when the President transmits to the President pro tempore of the Senate and the Speaker of the House of Representatives his written declaration that no inability exists, he shall resume the powers and duties of his office unless the Vice President and a majority of either the principal officers of the executive department or of such other body as Congress may by law provide, transmit within four days to the President pro tempore of the Senate and the Speaker of the House of Representatives their written declaration that the President is unable to discharge the powers and duties of his office. Thereupon Congress shall decide the issue, assembling within forty eight hours for that purpose if not in session. If the Congress, within twenty one days after receipt of the latter written declaration, or, if Congress is not in session, within twenty one days after Congress is required to assemble, determines by two thirds vote of both Houses that the President is unable to discharge the powers and duties of his office, the Vice President shall continue to discharge the same as Acting President; otherwise, the President shall resume the powers and duties of his office.
1. The right of citizens of the United States, who are eighteen years of age or older, to vote shall not be denied or abridged by the United States or by any State on account of age.
2. The Congress shall have power to enforce this article by appropriate legislation.
No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened.
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Taxing and Spending Clause
|United States of America|
This article is part of the series:
|Original text of the Constitution|
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Other countries · Law Portal
|An aspect of fiscal policy|
Article I, Section 8, Clause 1 of the United States Constitution, is known as the Taxing and Spending Clause. It is the clause that gives the federal government of the United States its power of taxation. Component parts of this clause are known as the General Welfare Clause and the Uniformity Clause.
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence[note 1] and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
One of the most often claimed defects of the Articles of Confederation was its lack of a grant to the central government of the power to lay and collect taxes. Under the Articles, Congress was forced to rely on requisitions upon the governments of its member states. Without the power to independently raise its own revenues, the Articles left Congress vulnerable to the discretion of the several State governments—each State made its own decision as to whether it would pay the requisition or not. Some states were not giving Congress the funds for which it asked by either paying only in part, or by altogether ignoring the request from Congress. Without the revenue to enforce its laws and treaties, or pay its debts, and without an enforcement mechanism to compel the States to pay, the Confederation was practically rendered impotent and was in danger of falling apart.
The powers to tax and spend are concurrent powers of the federal government and the individual states. These two powers have been received over time to be very broad, but have also, on occasion, been abridged by the courts. They are also currently held to be independent powers, not subject to the limitations imposed by the other enumerated powers of Congress.
Power to tax
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises
This power is considered by many to be essential to the administering of government. As argued under the Articles, the lack of a power to tax renders government ineffectual. Typically, the power is used to raise revenues for the support of government. But, Congress has employed the taxing power in uses other than solely for the raising of revenue, such as:
- regulatory taxation — taxing to regulate commerce;
- prohibitive taxation — taxing to discourage, suppress, or even exterminate commerce; and finally,
- tariffs — taxing as a means of protectionism.
In 1922, the Supreme Court struck down a 1919 tax on child labor in Bailey v. Drexel Furniture Co., commonly referred to as the "Child Labor Tax Case". The Court had previously held that Congress did not have the power to directly regulate labor, and found the law at issue to be an attempt to indirectly accomplish the same end. This ruling appeared to have been reinforced in United States v. Butler, in which the Supreme Court of the United States ruled that the processing taxes instituted under the 1933 Agricultural Adjustment Act were an unconstitutional attempt to regulate state activity in violation of the Tenth Amendment. However, despite its outcome, Butler affirmed that Congress does have a broad power to tax, and to expend revenues within its discretion. Butler was the last case in which the Court would find a constitutional limitation on the power of Congress to tax and spend.
Implicit power to spend
With the power to tax implicitly comes the power to spend the revenues raised thereby in order to meet the objectives and goals of the government. To what extent this power ought to be utilized by the Congress has been the source of continued dispute and debate since the inception of the federal government, as will be explained below. However, interpretations recognizing an implicit power to spend have been questioned.
The Supreme Court has also found that, in addition to the power to use taxes to punish disfavored conduct, Congress can also use its power to spend to encourage favored conduct. In South Dakota v. Dole, the Court upheld a federal law which withheld highway funds to states that did not raise their legal drinking age to 21.
Limitations on taxing power
Various places within the Constitution, and in one amendment, there are to be found several clauses related to Congress' power to tax and spend. These include both requirements for the apportionment of direct taxes and the uniformity of indirect taxes, the origination of revenue bills within the House of Representatives, the disallowal of taxes on exports, the General Welfare requirement, the limitation on the release of funds from the treasury except as provided by law, and the apportionment exemption of the Sixteenth Amendment.
The Constitution provides in the Origination Clause that all bills for raising revenue must originate in the House of Representatives. The idea underlying the clause is that Representatives, being the most numerous branch of Congress, and there by most closely associated with the people, know best the economic conditions of the people they represent, and how to generate revenues for the support of government in the least burdensome manner. Additionally, Representatives are regarded the most accountable to the people, and thus are least likely to exercise the taxing power abusively or injudiciously.
General Welfare Clause
to pay the Debts and provide for the common Defence and general Welfare of the United States;
Of all the limitations upon the power to tax and spend, the General Welfare Clause appears to have achieved notoriety as one of the most contentious. The dispute over the clause arises from two distinct disagreements. The first concerns whether the General Welfare Clause grants an independent spending power or is a restriction upon the taxing power. The second disagreement pertains to what exactly is meant by the phrase "general welfare."
The two primary authors of The Federalist set forth two separate, conflicting interpretations:
- James Madison advocated for the ratification of the Constitution in The Federalist and at the Virginia ratifying convention upon a narrow construction of the clause, asserting that spending must be at least tangentially tied to one of the other specifically enumerated powers, such as regulating interstate or foreign commerce, or providing for the military, as the General Welfare Clause is not a specific grant of power, but a statement of purpose qualifying the power to tax.
- Alexander Hamilton, only after the Constitution had been ratified, argued for a broad interpretation which viewed spending as an enumerated power Congress could exercise independently to benefit the general welfare, such as to assist national needs in agriculture or education, provided that the spending is general in nature and does not favor any specific section of the country over any other.
Although The Federalist was not reliably distributed outside of New York, the essays eventually became the dominant reference for interpreting the meaning of the Constitution as they provided the reasoning and justification behind the Framers' intent in setting up the federal government.
While Hamilton's view prevailed during the administrations of Presidents Washington and Adams, historians argue that his view of the General Welfare Clause was repudiated in the election of 1800, and helped establish the primacy of the Democratic-Republican Party for the subsequent 24 years. This belief is based on the motivating factor which the Kentucky and Virginia Resolutions played upon the electorate; the Kentucky Resolutions, authored by Thomas Jefferson, specifically criticized Hamilton's view. Further, Jefferson himself later described the distinction between the parties over this view as "almost the only landmark which now divides the federalists from the republicans...."
Associate Justice Joseph Story relied heavily upon The Federalist as a source for his Commentaries on the Constitution of the United States. In that work, Story excoriated both the Madisonian view and a previous, strongly nationalistic view of Hamilton's which was rejected at the Philadelphia Convention. Ultimately, however, Story opined the broader spending view of Hamilton, as described above, was the correct construction.
Prior to 1936, the United States Supreme Court had imposed a narrow interpretation on the Clause, as demonstrated by the holding in Bailey v. Drexel Furniture Co., (1922) in which a tax on child labor was an impermissible attempt to regulate commerce beyond that Court's equally narrow interpretation of the Commerce Clause.
This narrow view was overturned in 1936 in United States v. Butler. There, the Court agreed with Justice Story's construction, holding the power to tax and spend is an independent power; that is, the General Welfare Clause gives Congress power it might not derive anywhere else. However, the Court did limit the power to spending for matters affecting only the national welfare. The Court wrote:
[T]he [General Welfare] clause confers a power separate and distinct from those later enumerated, is not restricted in meaning by the grant of them, and Congress consequently has a substantive power to tax and to appropriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States. … It results that the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution. … But the adoption of the broader construction leaves the power to spend subject to limitations. … [T]he powers of taxation and appropriation extend only to matters of national, as distinguished from local, welfare.
The tax imposed in Butler was nevertheless held unconstitutional as a violation of the Tenth Amendment reservation of power to the states.
Shortly after Butler, in Helvering v. Davis, the Supreme Court interpreted the clause even more expansively, disavowing almost entirely any role for judicial review of Congressional spending policies, thereby conferring upon Congress a plenary power to impose taxes and to spend money for the general welfare subject almost entirely to Congress's own discretion. Even more recently, in South Dakota v. Dole the Court held Congress possessed power to indirectly influence the states into adopting national standards by withholding, to a limited extent, federal funds.
To date, the Hamiltonian view of the General Welfare Clause predominates in case law. Historically, however, the Anti-Federalists were wary of such an interpretation of this power during the ratification debates in the 1780s. Due to the objections raised by the Anti-Federalists, Madison was prompted to author his contributions to the Federalist Papers, attempting to quell the Anti-Federalists' fears of any such abuse by the proposed national government and to counter Anti-Federalist arguments against the Constitution.
Proponents of the Madisonian view also point to Hamilton's limited participation in the Constitutional Convention, particularly during the time frame in which this clause was crafted, as further evidence of his lack of constructive authority.
An additional view of the General Welfare Clause that is not as well known, but equally as authoritative as the views of both Madison and Hamilton, can be found in the pre-Revolutionary writings of John Dickinson, who was also a delegate to the Philadelphia Convention. In his Letters from a Farmer in Pennsylvania (1767), Dickinson wrote of what he understood taxing for the general welfare entailed:
The parliament unquestionably possesses a legal authority to regulate the trade of Great Britain, and all her colonies. Such an authority is essential to the relation between a mother country and her colonies; and necessary for the common good of all. He who considers these provinces as states distinct from the British Empire, has very slender notions of justice, or of their interests. We are but parts of a whole; and therefore there must exist a power somewhere, to preside, and preserve the connection in due order. This power is lodged in the parliament; and we are as much dependent on Great Britain, as a perfectly free people can be on another. I have looked over every statute relating to these colonies, from their first settlement to this time; and I find every one of them founded on this principle, till the Stamp Act administration. All before, are calculated to regulate trade, and preserve or promote a mutually beneficial intercourse between the several constituent parts of the empire; and though many of them imposed duties on trade, yet those duties were always imposed with design to restrain the commerce of one part, that was injurious to another, and thus to promote the general welfare. The raising of a revenue thereby was never intended. - (emphasis in the original)
The idea Dickinson conveyed above, explains University of Montana Law Professor Jeffrey T. Renz, is that taxing for the general welfare is but taxation as a means of regulating commerce. Renz expands upon this point:
If we excise "general welfare" from the Tax Clause, we are presented with the claim that Congress may not levy duties for purposes other than paying the debts and providing for the common defense. Indeed, omitting the general welfare phrase would eliminate nearly all duties for regulatory purposes. A strong argument could be made that while Congress might have the power to regulate foreign and interstate commerce, the omission of "general welfare" from the Tax Clause was intended to deny it the power to regulate commerce by means of duties.
The narrow construction of the General welfare clause is unusual when compared to similar clauses in most State constitutions, and many constitutions of other countries. Virtually every state constitution has a general welfare clause which is interpreted as granting the state an independent power to regulate for the general welfare. An international example is provided by a report from the Supreme Court of Argentina:
In Ferrocarril Central Argentino c/Provincia de Santa Fe, 569 the Argentine Court held that the General Welfare clause of the Argentine Constitution offered the federal government a general source of authority for legislation affecting the provinces. The Court recognized that the United States utilized the clause only as a source of authority for federal taxation and spending, not for general legislation, but recognized differences in the two constitutions.
The final phrase of the Taxing and Spending Clause stipulates:
but all Duties, Imposts and Excises shall be uniform throughout the United States.
Here, the requirement is that taxes must be geographically uniform throughout the United States. This means taxes affected by this provision must function "with the same force and effect in every place where the subject of it is found." However, this clause does not require revenues raised by the tax from each state be equal.
Justice Story characterized this requirement in a light more relevant to practicality and fairness:
It was to cut off all undue preferences of one state over another in the regulation of subjects affecting their common interests. Unless duties, imposts, and excises were uniform, the grossest and most oppressive inequalities, vitally affecting the pursuits and employments of the people of different states, might exist.
In other words, it was another check placed on the legislature in order to keep a larger group of states from "ganging up" to levy taxes benefiting them at the expense of the remaining, smaller group of states.
A somewhat notable exception to this limitation has been upheld by the Supreme Court. In United States v. Ptasynski, the Court allowed a tax exemption which was quasi-geographical in nature. In the case, oil produced within a defined geographic region above the Arctic Circle was exempted from a federal excise tax on oil production. The basis for the holding was that Congress had determined the Alaskan oil to be of its own class and exempted it on those grounds, even though the classification of the Alaskan oil was a function of where it was geographically produced.
To understand the nuance of the Court's holding, consider this explanation: Congress decides to implement a uniform tax on all coal mining. The tax so implemented distinguishes between different grades of coal (e.g., anthracite versus bituminous versus lignite) and exempts one of the grades from taxation. Even though the exempted grade could potentially be defined by where it is geographically produced, the tax itself is still geographically uniform.
Apportionment of direct taxes
Language elsewhere in the Constitution also expressly limits the taxing power. Article I, Section 9 has more than one clause so addressed. Clause 4 states:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.
Generally, a direct tax is subject to the apportionment rule, meaning taxes must be imposed among the states in proportion to each state's population in respect to that state's share of the whole national population. For example: As of the 2000 Census, nearly 34 million people populated California (CA). At the same time, the national population was 281.5 million people. This gave CA a 12 percent share of the national population, roughly. Were Congress to impose a direct tax in order to raise $1 trillion before the next census, the taxpayers of CA would be required to fund 12 percent of the total amount: $120 billion dollars.
Apportionment and income taxes
Before 1895, direct taxes were understood to be limited to "capitation or poll taxes" (Hylton v. United States) and "taxes on lands and buildings, and general assessments, whether on the whole property of individuals or on their whole real or personal estate" (Springer v. United States). The decision in Springer went further in declaring that all income taxes were indirect taxes—or more specifically, "within the category of an excise or duty." However, in 1895 income taxes derived from property such as interest, dividends, and rent (imposed under an 1894 Act) were treated as direct taxes by the Supreme Court in Pollock v. Farmers' Loan & Trust Co. and were ruled to be subject to the requirement of apportionment. As the income taxes imposed under the 1894 Act were not apportioned in such a manner, they were held unconstitutional. It was not the income tax per se, but the lack of a provision for its apportionment as a direct tax which made the tax unconstitutional.
The resulting case law prohibiting unapportioned taxes on incomes derived from property was later eliminated by the ratification of the Sixteenth Amendment in 1913. The text of the amendment was clear in its aim:
The Congress shall have power to lay and collect taxes on income, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
Shortly after, in 1916, the U.S. Supreme Court ruled in Brushaber v. Union Pacific Railroad that under the Sixteenth Amendment income taxes were constitutional even though unapportioned, just as the amendment had provided. In subsequent cases, the courts have interpreted the Sixteenth Amendment and the Brushaber decision as standing for the rule that the amendment allows income taxes on "wages, salaries, commissions, etc. without apportionment."
No taxes on exports
Article I, Section 9, Clause 5 provides a further limitation:
No Tax or Duty shall be laid on Articles exported from any State.
This provision was an important protection for the southern states secured during the Constitutional Convention. With the grant of absolute power over foreign commerce given to the federal government, the states whose economies relied chiefly on exports realized that any tax laid by the new central government upon a single item of export would apply very unevenly amongst all the states and favor states which did not export that good.
In 1996, the Supreme Court held this provision prohibits Congress to tax any goods in export transit, and further forbids taxes on any services related to such export transit.
Shortly after, the Supreme Court reaffirmed this provision in United States v. United States Shoe Corp. in 1998. As part of the Water Resources Development Act of 1986, a harbor maintenance tax (26 U.S.C. § 4461) was imposed at the ad valorem (percentile) rate of 0.125% the value of the cargo instead of at a rate dependent entirely upon the cost of the service provided by the port. The Court unanimously affirmed the ruling of the lower Federal Circuit Court that a "user fee" imposed in such a manner is, in fact, a tax on exports and unconstitutional.
However, Congress may tax goods not in transit even though they are intended for export so long as the tax is not imposed solely for the reason that the good will be exported. For example, a tax imposed on all medical supplies would be constitutional even though there is a likelihood a portion of those supplies will be exported.
Restrictions on spending
The constraints placed upon the Taxing and Spending Clause and the subsequent powers derived therefrom do not stop at the Taxing Power.
While such holdings are rare and unlikely under contemporary jurisprudence, the Supreme Court has shown in the past its possible willingness to intervene on Congressional spending where its effects amount to a disguised regulation on private activity. The case illustrative of this is United States v. Butler.
In this case, the Court held that Congress had imposed a coercive federal regulatory scheme on farm production under the Agricultural Adjustment Act of 1933 (AAA). By entering into contracts with farmers who reduced their output of selected crops, Congress had placed non-participating farmers at a distinct disadvantage to farmers who cooperated. As such, the program was not truly voluntary as it left the farmers no real choice; the options for the farmers were either cooperation or financial ruin. Under those circumstances, the regulatory scheme essentially required submission of farmers to a regulatory scheme Congress had no power to impose on its own.
The holding of the Butler case stemmed from the legal theory of that era, which held that regulation of production fell outside of Congress' commerce power. While the Court today is much more likely to defer to Congressional spending via the Commerce Clause, there are still circumstances where such spending may not be justifiable or validated by that power.
While clearing the hurdle of regulatory spending may be easier today than in the past, another significant hurdle exists in the unconstitutional conditions doctrine. Under this principle, the government may not use its spending power to purchase the constitutional rights of the spending's beneficiaries. Furthermore, entitlements may not be denied on grounds that violate a constitutionally protected right.
The Court has typically held this spending limitation as only applying to First Amendment rights where the choice imposed is unreasonable or vague, or where the beneficiary essentially is put into a position where acceptance of the conditions becomes obligated.
Conditional spending and federalism
In 1988, the holding in South Dakota v. Dole reaffirmed the authority of Congress to attach conditional strings to the receipt of federal funds by state or municipal governments. In addition to the requirement that spending be for the general welfare, however, the Court devised more scrutinous criteria for determining the constitutionality of the conditions imposed:
- First, there can be no surprises; that is, the conditions for receipt must be stated clearly and the beneficiary must be aware of those conditions and their consequences.
- Second, the conditions imposed must be related to the spending in question.
- Last, the incentive must not be so significant as to turn cooperation into coercion.
At dispute in Dole was a condition placed on the receipt of federal highway funds: elevation of the drinking age. Any state in which persons less than 21 years of age could lawfully possess and consume alcohol would consequently lose five percent of the federal highway funds allocated by Congress. The Court found the second and last conditions met since the requirement for the funds was germane to highway safety. Additionally, the loss of only five percent of the amount was not found so substantial as to be coercive in the eyes of the Court (as opposed to losing half or all of the funds might be).
In 2012, the court held for the first time in National Federation of Independent Business v. Sebelius that Congress had used its power under the spending clause in a way that was impermissibly coercive.
Power of the purse, generally
Article I, Section 9, Clause 7 imposes accountability on Congressional spending:
No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.
The first half of this clause indicates that Congress must have appropriated by law the funds to be spent before the funds can be released from the Treasury. It serves as a powerful check of the legislature on the executive branch, as it further secures Congress's power of the purse. This provision, when also combined with the bicameral nature of Congress and the quorum requirements of both the Senate and the House of Representatives, serves as a constitutional check and balance on the legislature itself, preventing most spending that in effect does not implicitly have broad support with respect to both representational popular will in the House of Representatives and inter-regional approval in the Senate.
Congress attempted to limit appropriations logrolling via riders with the Line Item Veto Act of 1996. The U.S. Supreme Court later struck down the act on grounds that it violated the Presentment Clause.
- ^ Emanuel, at 697.
- ^ Natelson, Robert G. (2003). "The General Welfare Clause and the Public Trust: An Essay in Original Understanding". Kansas Law Review (Lawrence, KS: Kansas Law Review, Inc.) 52 (1).
- ^ Madison, James. (April 1787) Vices of the Political System of the United States. The Papers of James Madison. (Edited by William T. Hutchinson et al. Chicago and London: University of Chicago Press, 1962-77)
- ^ Urofsky, Melvin I.; Paul Finkelman (2002). A March of Liberty: A Constitutional History of the United States. 1 (2nd ed.). New York, NY: Oxford University Press. pp. 81–82. ISBN 0-394-56414-6.
- ^ Journals of the Continental Congress, 1774-1789. (Edited by Worthington C. Ford et al. 34 vols. Washington, D.C.: Government Printing Office, 1904-37)
- ^ Journals of the Continental Congress, 1774-1789. (Edited by Worthington C. Ford et al. 34 vols. Washington, D.C.: Government Printing Office, 1904-37)
- ^ Hamilton, The Federalist No. 32, The Same Subject Continued (Concerning the General Power of Taxation), The Daily Advertiser
- ^ Killian, at 153.
- ^ a b c United States v. Butler, 297 U.S. 1 (1936).
- ^ License Tax Cases, 72 U.S. 462 (1866).
- ^ McCray v. United States, 195 U.S. 27 (1904).
- ^ J. W. Hampton, Jr. & Co. v. United States, 276 U.S. 394 (1928).
- ^ a b Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922).
- ^ a b Renz, Jeffrey T. (1999). "What Spending Clause? (or The President's Paramour): An Examination of the Views of Hamilton, Madison, and Story on Article I, Section 8, Clause I of the United States Constitution". John Marshall Law Review (Chicago, IL: John Marshall Law School) 33 (81).
- ^ a b c South Dakota v. Dole, 483 U.S. 203 (1987).
- ^ a b Madison, The Federalist No. 41 General View of the Powers Conferred by The Constitution, The Independent Journal
- ^ Madison, James. (3 March 1817) Letter to the House of Representatives,Veto of federal public works bill, March 3, 1817
- ^ Woods, Thomas E., Jr. (2008). 33 Questions About American History You're Not Supposed to Ask. New York City: Three Rivers Press.
- ^ Hamilton, Alexander. (5 December 1791) "Report on Manufactures" The Papers of Alexander Hamilton (ed. by H.C. Syrett et al.; New York and London: Columbia University Press, 1961-79)
- ^ a b Furtwangler (1984).
- ^ Eastman, John C. (2001). "Restoring the "General" to the General Welfare Clause". Chapman Law Review (Orange, CA: Chapman University School of Law) 4 (63).
- ^ Thomas Jefferson to Albert Gallatin (June 16, 1817), in Founders' Constitution, Vol. II (Philip B. Kurland & Ralph Lerner eds., 1987), at 452.
- ^ Helvering v. Davis, 301 U.S. 619 (1937).
- ^ "Brutus, no. 5" (13 December 1787)
- ^ "Brutus, no. 6" (27 December 1787)
- ^ James Madison, Report on Resolutions, in 6 WRITINGS OF JAMES MADISON, quoted in Roger Pilon, Freedom, Responsibility, and the Constitution: On Recovering Our Founding Principles, 68 Notre Dame L. Rev. 507, at 530 
- ^ The National Archives. "America's Founding Fathers: Delegates to the Constitutional Convention". The National Archives.
- ^ Frustrated with his two counterparts in the NY delegation, Hamilton left the convention at the end of June 1787. He was absent for much of the remaining convention, present only on Aug 13 and for the two final weeks in Sept. Nearly all of the formulation of the General Welfare Clause took place during this absence. See Story (1833), § 925.
- ^ Lloyd, Gordon; Jeff Sammon (2006). "Individual Biographies of the Delegates to the Constitutional Convention". TeachingAmericanHistory.org.
- ^ Dickinson, John (December 7, 1767). written at Philadelphia. Letters from a Farmer in Pennsylvania, to the Inhabitants of the British Colonies. New York, NY: The Outlook Company (published 1903). pp. 13–14. ISBN 1-140-71514-3.
- ^ Miller, Jonathan M. (1997). "The Authority of a Foreign Talisman: A Study of U.S. Constitutional Practice as Authority in Nineteenth Century Argentina and the Argentine Elite's Leap of Faith". American University Law Review (Washington, D.C.: American University Washington College of Law) 46 (1483, at 1562).
- ^ Head Money Cases, 112 U.S. 580 (1884).
- ^ Story (1833), § 954.
- ^ United States v. Ptasynski, 462 U.S. 74 (1983).
- ^ Hylton v. United States, 3 U.S. 171 (1796).
- ^ a b Springer v. United States, 102 U.S. 586, at 602. (1880).
- ^ Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601 (1895).
- ^ Brushaber v. Union Pacific Railroad, 240 U.S. 1 (1916).
- ^ Parker v. Commissioner, 724 F.2d 469 (1984).
- ^ Monk, Linda R. (2003). The Words We Live By: Your Annotated Guide to the Constitution. Hyperion. ISBN 0-7868-6720-5.
- ^ Story (1833), § 1011.
- ^ United States v. IBM, 517 U.S. 843 (1996).
- ^ United States v. United States Shoe Corp., 523 U.S. 360 (1998).
- ^ May, pg. 242
- ^ May, pg. 243
- ^ United States v. American Library Association, Inc., 539 U.S. 194 (2003).
- ^ Rumsfeld v. Forum for Academic and Institutional Rights, Inc., 547 U.S. 47 (2006).
- ^ Grove City College v. Bell, 465 U.S. 555 (1984).
- ^ Bob Drummond (June 1, 2012). "Limits on Spending Power Seen as Health Ruling’s Legacy". bloomberg.
- Emanuel, Steven L. (2004). Constitutional Law (Emanuel Law Outlines) (22nd ed.). New York, NY: Aspen Publishers, Inc.. pp. 57–61. ISBN 0-7355-5172-3.
- Epstein, Lee; Walker, Thomas G. (2007). Constitutional Law for a Changing America: Institutional Powers and Constraints (6th ed.). Washington, D.C.: CQ Press. pp. 510–62. ISBN 0-87187-612-4.
- Furtwangler, Albert (1984). The Authority of Publius: A Reading of the Federalist Papers. Ithaca, NY: Cornell University Press. ISBN 0-8014-1643-4.
- Hamilton, Alexander; Madison, James (1787-1788). "The Federalist Nos. 30-36, & 41". The Federalist. New York, NY: The New York Packet, the Daily Advertiser, and the Independent Journal. ISBN 0-8239-5735-7.
- Jensen, Erik M. (2005). The Taxing Power: A Reference Guide to the United States Constitution. Westport, CT: Praeger Publishers. ISBN 978-0-313-31229-8.
- Killian, Johnny; George Costello, Kenneth Thomas (2004). The Constitution of the United States of America—Analysis and Interpretation. Washington, D.C.: U.S. Government Printing Office. pp. 152–168. ISBN 0-16-063268-4.
- May, Christopher N.; Allan Ides (2007). Constitutional Law: National Power and Federalism (4th ed.). New York, NY: Aspen Publishers.. pp. 234–247. ISBN 0-7355-2000-3.
- O'Brien, David M. (2008). Constitutional Law and Politics: Struggles for Power and Governmental Accountability. I (7th ed.). New York, NY: W.W. Norton & Company. pp. 667–80. ISBN 0-393-93038-6.
- Story, Joseph (1833). Commentaries on the Constitution of the United States. Boston, MA: Hilliard, Gray and Company. ISBN 0-306-70363-7.
- Tucker, John Randolph (1899). Tucker, Henry St. George. ed. The Constitution of the United States: A Critical Discussion of Its Genesis, Development, and Interpretation. I. Chicago, IL: Callaghan & Co.. pp. 456–508. ISBN 0-8377-1206-8.
Income Tax ................................................................................................................................. 1953
History and Purpose of the Amendment .......................................................................... 1953
Income Subject to Taxation ............................................................................................... 1954
Corporate Dividends: When Taxable ......................................................................... 1955
Corporate Earnings: When Taxable ........................................................................... 1958
Gains: When Taxable .................................................................................................. 1960
Income from Illicit Transactions ................................................................................ 1962
Deductions and Exemptions ....................................................................................... 1962
Diminution of Loss ...................................................................................................... 1963
1 157 U.S. 429 (1895); 158 U.S. 601 (1895).
2 Ch. 349, § 27, 28 Stat. 509, 553.
3 The Court conceded that taxes on incomes from ‘‘professions, trades, employments,
or vocations’’ levied by this act were excise taxes and therefore valid. The
entire statute, however, was voided on the ground that Congress never intended to
permit the entire ‘‘burden of the tax to be borne by professions, trades, employments,
or vocations’’ after real estate and personal property had been exempted, 158
U.S. at 635.
4 Springer v. United States, 102 U.S. 586 (1881).
5 Ch. 173, § 116, 13 Stat. 223, 281 (1864).
6 For an account of the Pollock decision, see supra, pp. 352–56.
7 173 U.S. 509 (1899).
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
History and Purpose of the Amendment
The ratification of this Amendment was the direct consequence
of the Court’s decision in 1895 in Pollock v. Farmers’ Loan & Trust
Co., 1 whereby the attempt of Congress the previous year to tax incomes
uniformly throughout the United States 2 was held by a divided
court to be unconstitutional. A tax on incomes derived from
property, 3 the Court declared, was a ‘‘direct tax’’ which Congress
under the terms of Article I, § 2, and § 9, could impose only by the
rule of apportionment according to population, although scarcely
fifteen years prior the Justices had unanimously sustained 4 the
collection of a similar tax during the Civil War, 5 the only other occasion
preceding the Sixteenth Amendment in which Congress had
ventured to utilize this method of raising revenue. 6
During the interim between the Pollock decision in 1895 and
the ratification of the Sixteenth Amendment in 1913, the Court
gave evidence of a greater awareness of the dangerous consequences
to national solvency which that holding threatened, and
partially circumvented the threat, either by taking refuge in
redefinitions of ‘‘direct tax’’ or, and more especially, by emphasizing,
virtually to the exclusion of the former, the history of excise
taxation. Thus, in a series of cases, notably Nicol v. Ames, 7
1954 AMENDMENT 16—INCOME TAX
8 178 U.S. 41 (1900).
9 184 U.S. 608 (1902).
10 Flint v. Stone Tracy Co., 220 U.S. 107 (1911).
11 Brushaber v. Union Pac. R.R., 240 U.S. 1 (1916); Stanton v. Baltic Mining
Co., 240 U.S. 103 (1916); Tyee Realty Co. v. Anderson, 240 U.S. 115 (1916).
12 Brushaber v. Union Pac. R.R., 240 U.S. 1, 18–19 (1916).
13 Stanton v. Baltic Mining Co., 240 U.S. 103, 112 (1916).
14 Stratton’s Independence v. Howbert, 231 U.S. 399 (1913); Doyle v. Mitchell
Bros. Co., 247 U.S. 179 (1918).
15 Eisner v. Macomber, 252 U.S. 189 (1920); Bowers v. Kerbaugh-Empire Co.,
271 U.S. 170 (1926).
Knowlton v. Moore, 8 and Patton v. Brady, 9 the Court held the following
taxes to have been levied merely upon one of the ‘‘incidents
of ownership’’ and hence to be excises: a tax which involved affixing
revenue stamps to memoranda evidencing the sale of merchandise
on commodity exchanges, an inheritance tax, and a war revenue
tax upon tobacco on which the hitherto imposed excise tax had already
been paid and which was held by the manufacturer for resale.
Because of such endeavors the Court thus found it possible to
sustain a corporate income tax as an excise ‘‘measured by income’’
on the privilege of doing business in corporate form. 10 The adoption
of the Sixteenth Amendment, however, put an end to speculation
whether the Court, unaided by constitutional amendment,
would persist along these lines of construction until it had reversed
its holding in the Pollock case. Indeed, in its initial appraisal 11 of
the Amendment it classified income taxes as being inherently ‘‘indirect.’’
‘‘[T]he command of the amendment that all income taxes
shall not be subject to apportionment by a consideration of the
sources from which the taxed income may be derived, forbids the
application to such taxes of the rule applied in the Pollock case by
which alone such taxes were removed from the great class of excises,
duties, and imports subject to the rule of uniformity and were
placed under the other or direct class.’’ 12 ‘‘[T]he Sixteenth Amendment
conferred no new power of taxation but simply prohibited the
previous complete and plenary power of income taxation possessed
by Congress from the beginning from being taken out of the category
of indirect taxation to which it inherently belonged.’’ 13
Income Subject to Taxation
Building upon definitions formulated in cases construing the
Corporation Tax Act of 1909, 14 the Court initially described income
as the ‘‘gain derived from capital, from labor, or from both combined,’’
inclusive of the ‘‘profit gained through a sale or conversion
of capital assets’’; 15 in the following array of factual situations it
AMENDMENT 16—INCOME TAX 1955
16 247 U.S. 339, 344 (1918). On the other hand, in Lynch v. Turrish, 247 U.S.
221 (1918), the single and final dividend distributed upon liquidation of the entire
assets of a corporation, although equaling twice the par value of the capital stock,
was declared to represent only the intrinsic value of the latter earned prior to the
effective date of the Amendment, and hence was not taxable as income to the shareholder
in the year in which actually received. Similarly, in Southern Pacific Co. v.
Lowe, 247 U.S. 330 (1918), dividends paid out of surplus accumulated before the effective
date of the Amendment by a railway company whose entire capital stock was
owned by another railway company and whose physical assets were leased to and
used by the latter was declared to be a nontaxable bookkeeping transaction between
virtually identical corporations.
17 247 U.S. 347 (1918).
18 252 U.S. 189, 206–08 (1920).
subsequently applied this definition to achieve results that have
been productive of extended controversy.
Corporate Dividends: When Taxable.—Rendered in conformity
with the belief that all income ‘‘in the ordinary sense of the
word’’ became taxable under the Sixteenth Amendment, the earliest
decisions of the Court on the taxability of corporate dividends
occasioned little comment. Emphasizing that in all such cases the
stockholder is to be viewed as ‘‘a different entity from the corporation,’’
the Court in Lynch v. Hornby, 16 held that a cash dividend
equal to 24 percent of the par value of the outstanding stock and
made possible largely by the conversion into money of assets
earned prior to the adoption of the Amendment, was income taxable
to the stockholder for the year in which he received it, notwithstanding
that such an extraordinary payment might appear ‘‘to
be a mere realization in possession of an inchoate and contingent
interest . . . [of] the stockholder . . . in a surplus of corporate assets
previously existing.’’ In Peabody v. Eisner, 17 decided on the
same day and deemed to have been controlled by the preceding
case, the Court ruled that a dividend paid in the stock of another
corporation, although representing earnings that had accrued before
ratification of the Amendment, was also taxable to the shareholder
as income. The dividend was likened to a distribution in
Two years later the Court decided Eisner v. Macomber, 18 and
the controversy which that decision precipitated still endures. Departing
from the interpretation placed upon the Sixteenth Amendment
in the earlier cases, i.e., that the purpose of the Amendment
was to correct the ‘‘error’’ committed in the Pollock case and to restore
income taxation to ‘‘the category of indirect taxation to which
it inherently belonged,’’ Justice Pitney, who delivered the opinion
in the Eisner case, indicated that the sole purpose of the Sixteenth
Amendment was merely to ‘‘remove the necessity which otherwise
might exist for an apportionment among the States of taxes laid on
1956 AMENDMENT 16—INCOME TAX
19 Id. at 207, 211–12 (1920). This decision has been severely criticized, chiefly
on the ground that gains accruing to capital over a period of years are not income
and are not transformed into income by being dissevered from capital through sale
or conversion. Critics have also experienced difficulty in understanding how a tax
on income which has been severed from capital can continue to be labeled a ‘‘direct’’
tax on the capital from which the severance has thus been made. Finally, the contention
has been made that in stressing the separate identities of a corporation and
its stockholders, the Court overlooked the fact that when a surplus has been accumulated,
the stockholders are thereby enriched, and that a stock dividend may
therefore be appropriately viewed simply as a device whereby the corporation reinvests
money earned in their behalf. See also Merchants’ L. & T. Co. v. Smietanka,
255 U.S. 509 (1921).
20 Reconsideration was refused in Helvering v. Griffths, 318 U.S. 371 (1943).
income.’’ He thereupon undertook to demonstrate how what was
not income, but an increment of capital when received, could later
be transmitted into income upon sale or conversion and could be
taxed as such without the necessity of apportionment. In short, the
term ‘‘income’’ acquired to some indefinite extent a restrictive significance.
Specifically, the Justice held that a stock dividend was capital
when received by a stockholder of the issuing corporation and did
not become taxable without apportionment, that is, as ‘‘income,’’
until sold or converted, and then only to the extent that a gain was
realized upon the proportion of the original investment which such
stock represented. ‘‘A stock dividend,’’ Justice Pitney maintained,
‘‘far from being a realization of profits to the stockholder, . . . tends
rather to postpone such realization, in that the fund represented by
the new stock has been transferred from surplus to capital, and no
longer is available for actual distribution . . . not only does a stock
dividend really take nothing from . . . the corporation and add
nothing to that of the shareholder, but . . . the antecedent accumulation
of profits evidenced thereby, while indicating that the shareholder
is richer because of an increase of his capital, at the same
time shows [that] he has not realized or received any income in’’
what is no more than a ‘‘bookkeeping transaction.’’ But conceding
that a stock dividend represented a gain, the Justice concluded
that the only gain taxable as ‘‘income’’ under the Amendment was
‘‘a gain, a profit, something of exchangeable value proceeding from
the property, severed from the capital however invested or employed,
and coming in, being ‘derived,’ that is, received or drawn
by the recipient [the taxpayer] for his separate use, benefit, and
disposal; . . . .’’ Only the latter in his opinion, answered the description
of income ‘‘derived’’ from property, whereas ‘‘a gain accruing
to a capital, not a growth or an increment of value in the investment’’
did not. 19 Although steadfastly refusing to depart from
the principle 20 which it asserted in Eisner v. Macomber, the Court
AMENDMENT 16—INCOME TAX 1957
21 United States v. Phellis, 257 U.S. 156 (1921); Rockefeller v. United States,
257 U.S. 176 (1921). See also Cullinan v. Walker, 262 U.S. 134 (1923).
In Marr v. United States, 268 U.S. 536, 540–41 (1925), it was held that the increased
market value of stock issued by a new corporation in exchange for stock of
an older corporation, the assets of which it was organized to absorb, was subject to
taxation as income to the holder, notwithstanding that the income represented profits
of the older corporation and that the capital remained invested in the same general
enterprise. Weiss v. Stearn, 265 U.S. 242 (1924), in which the additional value
in new securities was held not taxable, was likened to Eisner v. Macomber, and distinguished
from the aforementioned cases on the ground of preservation of corporate
identity. Although the ‘‘new corporation had . . . been organized to take over the
assets and business of the old . . . , the corporate identity was deemed to have been
substantially maintained because the new corporation was organized under the laws
of the same State with presumably the same powers as the old. There was also no
change in the character of the securities issued,’’ with the result that ‘‘the proportional
interest of the stockholder after the distribution of the new securities was
deemed to be exactly the same.’’
Under existing law, however, when a taxpayer exchanges all of the outstanding
stock for a minor percentage of the total shares of a larger corporation, plus cash,
the gain to be recognized in full is not limited to the cash but embraces the excess
of the sum of the market value of the stock acquired plus the cash over the cost
of the original stock plus the expenses of the sale. Turnbow v. Commissioner, 368
U.S. 337 (1961).
22 Miles v. Safe Deposit Co., 259 U.S. 247 (1922).
23 Koshland v. Helvering, 298 U.S. 441 (1936).
in subsequent decisions has, however, slightly narrowed the application
thereof. Thus, the distribution, as a dividend, to stockholders
of an existing corporation of the stock of a new corporation to
which the former corporation, under a reorganization, had transferred
all its assets, including a surplus of accumulated profits, was
treated as taxable income. The fact that a comparison of the market
value of the shares in the older corporation immediately before,
with the aggregate market value of those shares plus the dividend
shares immediately after, the dividend showed that the stockholders
experienced no increase in aggregate wealth was declared not
to be a proper test for determining whether taxable income had
been received by these stockholders. 21 On the other hand, no taxable
income was held to have been produced by the mere receipt
by a stockholder of rights to subscribe for shares in a new issue of
capital stock, the intrinsic value of which was assumed to be in excess
of the issuing price. The right to subscribe was declared to be
analogous to a stock divided, and ‘‘only so much of the proceeds obtained
upon the sale of such rights as represents a realized profit
over cost’’ to the stockholders was deemed to be taxable income. 22
Similarly, on grounds of consistency with Eisner v. Macomber, the
Court has ruled that inasmuch as it gave the stockholder an interest
different from that represented by his former holdings, a dividend
in common stock to holders of preferred stock, 23 or a dividend
1958 AMENDMENT 16—INCOME TAX
24 Helvering v. Gowran, 302 U.S. 238 (1937).
25 Helvering v. National Grocery Co., 304 U.S. 282, 288–89 (1938). In Helvering
v. Mitchell, 303 U.S. 391 (1938), the defendant contended the collection of fifty per
cent of any deficiency in addition to the deficiency alleged to have resulted from a
fraudulent intent to evade the income tax amounted to the imposition of a criminal
penalty. The Court, however, described the additional sum as a civil and not a
criminal sanction, and one whch could be constitutionally employed to safeguard the
Government against loss of revenue. In contrast, the exaction upheld in Helvering
v. National Grocery Co., though conceded to possess the attributes of a civil sanction,
was declared to be sustainable as a tax.
26 311 U.S. 46 (1940). See also Crane-Johnson Co. v. Helvering, 311 U.S. 54
27 311 U.S. 53.
in preferred stock accepted by a holder of common stock 24 was income
taxable under the Sixteenth Amendment.
Corporate Earnings: When Taxable.—On at least two occasions
the Court has rejected as untenable the contention that a tax
on undistributed corporate profits is essentially a penalty rather
than a tax or that it is a direct tax on capital and hence is not exempt
from the requirement of apportionment. Inasmuch as the exaction
was permissible as a tax, its validity was held not to be impaired
by its penal objective, namely, ‘‘to force corporations to distribute
earnings in order to create a basis for taxation against the
stockholders.’’ As to the added contention that, because liabilty was
assessed upon a mere purpose to evade imposition of surtaxes
against stockholders, the tax was a direct tax on a state of mind,
the Court replied that while ‘‘the existence of the defined purpose
was a condition precedent to the imposition of the tax liability, . . .
[did] not prevent it from being a true income tax within the meaning
of the Sixteenth Amendment.’’ 25 Subsequently, in Helvering v.
Northwest Steel Mills, 26 this appraisal of the constitutionality of
the undistributed profits tax was buttressed by the following observation:
‘‘It is true that the surtax is imposed upon the annual income
only if it is not distributed, but this does not serve to make
it anything other than a true tax on income within the meaning
of the Sixteenth Amendment. Nor is it true . . . that because there
might be an impairment of the capital stock, the tax on the current
annual profit would be the equivalent of a tax upon capital. Whether
there was an impairment of the capital stock or not, the tax . . .
was imposed on profits earned during . . .—a tax year—and therefore
on profits constituting income within the meaning of the Sixteenth
Likening a cooperative to a corporation, federal courts have
also declared to be taxable income the net earnings of a farmers’
cooperative, a portion of which was used to pay dividends on capital
stock without reference to patronage. The argument that such
AMENDMENT 16—INCOME TAX 1959
28 Farmers Union Co-op v. Commissioner, 90 F.2d 488, 491, 492 (8th Cir. 1937).
29 Burk-Waggoner Ass’n v. Hopkins, 269 U.S. 110 (1925).
30 268 U.S. 628 (1925).
31 Texas & Pacific Ry. Co. v. United States, 286, U.S. 285, 289 (1932); Continental
Tie & L. Co. v. United States, 286 U.S. 290 (1932).
32 15 U.S.C. § 78p.
33 General American Investors Co. v. Commissioner, 348 U.S. 434 (1955).
34 Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955).
earnings were in reality accumulated savings of its patrons which
the cooperative held as their bailee was rejected as unsound for the
reason that ‘‘while those who might be entitled to patronage dividends
have . . . an interest in such earnings, such interest never
ripens into an individual ownership . . . until and if a patronage
dividend be declared.’’ Had such net earnings been apportioned to
all of the patrons during the year, ‘‘there might be . . . a more serious
question as to whether such earnings constituted ‘income’ [of
the cooperative] within the Amendment.’’ 28 Similarly, the power of
Congress to tax the income of an unincorporated joint stock association
has been held to be unaffected by the fact that under state
law the association is not a legal entity and cannot hold title to
property, or by the fact that the shareholders are liable for its
debts as partners. 29
Whether subsidies paid to corporations in money or in the form
of grants of land or other physical property constitute taxable income
has also concerned the Court. In Edwards v. Cuba Railroad,
30 it ruled that subsidies of lands, equipment, and money paid
by Cuba for the construction of a railroad were not taxable income
but were to be viewed as having been received by the railroad as
a reimbursement for capital expenditures in completing such
project. On the other hand, sums paid out by the Federal Government
to fulfill its guarantee of minimum operating revenue to railroads
during the six months following relinquishment of their control
by that government were found to be taxable income. Such
payments were distinguished from those excluded from computation
of income in the preceding case in that the former were neither
bonuses, nor gifts, nor subsidies, ‘‘that is, contributions to capital.’’
31 Other corporate receipts deemed to be taxable as income include
the following: (1) ‘‘insiders profits’’ realized by a director and
stockholder of a corporation from transaction in its stock, which, as
required by the Securities and Exchange Act, 32 are paid over to the
corporation; 33 (2) money received as exemplary damages for fraud
or as the punitive two-thirds portion of a treble damage antitrust
recovery; 34 and (3) compensation awarded for the fair rental value
of trucking facilities operated by the taxpayer under control and
possession of the Government during World War II, for in the last
1960 AMENDMENT 16—INCOME TAX
35 Commissioner v. Gillette Motor Co., 364 U.S. 130 (1960).
36 Helvering v. Brumn, 309 U.S. 461, 468–69 (1940).
37 Crane v. Commissioner, 331 U.S. 1, 15–16 (1947).
38 The donor could not, ‘‘by mere gift, enable another to hold this stock free from
. . . [the] right . . . [of] the sovereign to take part of any increase in its value when
separated through sale or conversion and reduced to possession.’’ Taft v. Bowers,
278 U.S. 470, 482, 484 (1929). However, when a husband, as part of a divorce settlement,
transfers his own corporate stock to his wife, he is deemed to have exchanged
the stock for the release of his wife’s inchoate, marital rights, the value of which
are presumed to be equal to the current, market value of the stock, and, accordingly,
he incurs a taxable gain measured by the difference between the initial purchase
price of the stock and said market value upon transfer. United States v. Davis, 370
U.S. 65 (1962).
instance the Government never acquired title to the property and
had not damaged it beyond ordinary wear. 35
Gains: When Taxable.—When through forfeiture of a lease in
1933, a landlord became possessed of a new building erected on his
land by the outgoing tenant, the resulting gain to the former was
taxable to him in that year. Although ‘‘economic gain is not always
taxable as income, it is settled that the realization of gain need not
be in cash derived from the sale of an asset. . . . The fact that the
gain is a portion of the value of the property received by the . . .
[landlord] does not negative its realization. . . . [Nor is it necessary]
to recognition of taxable gain that . . . [the landlord] should
be able to sever the improvement begetting the gain from his original
capital.’’ Hence, the taxpayer was incorrect in contending that
the Amendment ‘‘does not permit the taxation of such [a] gain
without apportionment amongst the states. 36 Consistent with this
holding the Court has also ruled that when an apartment house
was acquired by bequest subject to an unassumed mortgage and
several years thereafter was sold for a price slightly in excess of
the mortgage, the basis for determining the gain from that sale
was the difference between the selling price, undiminished by the
amount of the mortgage, and the value of the property at the time
of the acquisition, less deductions for depreciation during the years
the building was held by the taxpayer. The latter’s contention that
the Revenue Act, as thus applied, taxed something which was not
revenue was declared to be unfounded. 37
As against the argument of a donee that a gift of stock became
a capital asset when received and that therefore, when disposed of,
no part of that value could be treated as taxable income to said
donee, the Court has declared that it was within the power of Congress
to require a donee of stock, who sells it at a profit, to pay
income tax on the difference between the selling price and the
value when the donor acquired it. 38 Moreover, ‘‘the receipt in cash
or property . . . not [being] the only characteristic of realization of
AMENDMENT 16—INCOME TAX 1961
39 Helvering v. Horst, 311 U.S. 112, 115–16 (1940).
With a frequency that for obvious reasons is progressively diminishing, the
Court also has been called upon to resolve questions as to whether gains, realized
after 1913, on transactions consummated prior to ratification of the Sixteenth
Amendment are taxable, and if so, how such tax is to be determined. The Court’s
answer generally has been that if the gain to the person whose income is under consideration
became such subsequently to the date at which the amendment went into
effect, namely, March 1, 1913, and is a real, and not merely an apparent, gain, said
gain is taxable. Thus, one who purchased stock in 1912 for $500 could not limit his
taxable gain to the difference, $695, the value of the stock on March 1, 1913 and
$13,931, the price obtained on the sale thereof, in 1916; but was obliged to pay tax
on the entire gain, that is the difference between the original purchase price and
the proceeds of the sale, Goodrich v. Edwards, 255 U.S. 527 (1921). Conversely, one
who acquired stock in 1912 for $291,600 and who sold the same in 1916 for only
$269,346, incurred a loss and could not be taxed at all, notwithstanding the fact
that on March 1, 1913, his stock had depreciated to $148,635. Walsh v. Brewster,
255 U.S. 536 (1921). On the other hand, although the difference between the
amount of life insurance premiums paid as of 1908, and the amount distributed in
1919, when the insured received the amount of his policy plus cash dividends apportioned
thereto since 1908, constituted a gain, that portion of the latter which accrued
between 1908 and 1913 was deemed to be an accretion of capital and hence
not taxable. Lucas v. Alexander, 279 U.S. 473 (1929).
However, a litigant who, in 1915, reduced to judgment a suit pending on February
26, 1913, for an accounting under a patent infringement, was unable to have
treated as capital, and excluded from the taxable income produced by such settlement,
that portion of his claim which had accrued prior to March 1, 1913. Income
within the meaning of the Amendment was interpreted to be the fruit that is born
of capital, not the potency of fruition. All that the taxpayer possessed in 1913 was
a contingent chose in action which was inchoate, uncertain, and contested. United
States v. Safety Car Heating Co., 297 U.S. 88 (1936).
Similarly, purchasers of coal lands subject to mining leases executed before
adoption of the Amendment could not successfully contend that royalties received
during 1920–1926 were payments for capital assets sold before March 1, 1913, and
hence not taxable. Such an exemption, these purchasers argued, would have been
in harmony with applicable local law whereunder title to coal passes immediately
to the lessee on execution of such leases. To the Court, on the other hand, such
leases were not to be viewed ‘‘as a ‘sale’ of the mineral content of the soil’’ inasmuch
as minerals ‘‘may or may not be present in the leased premises, and may or may
not be found [therein]. . . . If found, their abstraction . . . is a time consuming operation
and the payments made by the lessee . . . do not normally become payable
as the result of a single transaction. . . .’’ The result for tax purposes would have
been the same even had the lease provided that title to the minerals would pass
income to a taxpayer on the cash receipt basis,’’ it follows that one
who is normally taxable only on the receipt of interest payments
cannot escape taxation thereon by giving away his right to such income
in advance of payment. When ‘‘the taxpayer does not receive
payment of income in money or property, realization may occur
when the last step is taken by which he obtains the fruition of the
economic gain which has already accrued to him.’’ Hence an owner
of bonds, reporting on the cash receipts basis, who clipped interest
coupons therefrom before their due date and gave them to his son,
was held to have realized taxable income in the amount of said
coupons, notwithstanding that his son had collected them upon maturity
later in the year. 39
1962 AMENDMENT 16—INCOME TAX
only ‘‘on severance by the lessee.’’ Bankers Coal Co. v. Burnet, 287 U.S. 308 (1932);
Burnet v. Harmel, 287 U.S. 103, 106–107, 111 (1932).
40 274 U.S. 259 (1927).
41 42 Stat. 227, 250, 268.
42 274 U.S. 259, 263. Profits from illegal undertakings being taxable as income,
expenses in the form of salaries and rentals incurred by bookmakers are deductible.
Commissioner v. Sullivan, 356 U.S. 27 (1958).
43 Rutkin v. United States, 343 U.S. 130 (1952). Four Justices, Black, Reed,
Frankfurter, and Douglas, dissented.
44 James v. United States, 366 U.S. 213, 219 (1961) (overruling Commissioner
v. Wilcox, 327 U.S. 404 (1946)).
45 Brushaber v. Union Pac. R.R., 240 U.S. 1 (1916).
46 MacLaughlin v. Alliance Ins. Co., 286 U.S. 244, 250 (1932).
Income from Illicit Transactions.—In United States v. Sullivan,
40 the Court, held that gains derived from illicit traffic were
taxable income under the act of 1921. 41 Said Justice Holmes for
the unanimous Court: ‘‘We see no reason . . . why the fact that a
business is unlawful should exempt it from paying the taxes that
if lawful it would have to pay.’’ 42 Consistent therewith, although
not without dissent, the Court ruled that Congress has the power
to tax as income moneys received by an extortioner, 43 and, more
recently, that embezzled money is taxable income of an embezzler
in the year of embezzlement. ‘‘When the taxpayer acquires earnings,
lawfully or unlawfully, without the consensual recognition, express
or implied, of an obligation to repay and without restriction
as to their disposition, ‘he has received income . . . , even though
it may still be claimed that he is not entitled to retain the money,
and even though he may still be adjudged liable to restore its
equivalent.’ ’’ 44
Deductions and Exemptions.—Notwithstanding the authorization
contained in the Sixteenth Amendment to tax income ‘‘from
whatever source derived,’’ Congress has been held not to be precluded
thereby from granting exemptions. 45 Thus, the fact that
‘‘under the Revenue Acts of 1913, 1916, 1917, and 1918, stock fire
insurance companies were taxed . . . upon gains realized from the
sale . . . of property accruing subsequent to March 1, 1913,’’ but
were not so taxed by the Revenue Acts of 1921, 1924, and 1926,
did not prevent Congress, under the terms of the Revenue Act of
1928, from taxing all the gain attributable to increase in value
after March 1, 1913, which such a company realized from a sale of
property in 1928. The constitutional power of Congress to tax a
gain being well established, Congress was declared competent to
choose ‘‘the moment of its realization and the amount realized’’;
and ‘‘its failure to impose a tax upon the increase in value in the
earlier years . . . [could not] preclude it from taxing the gain in the
year when realized . . . .’’ 46 Congress is equally well equipped with
the ‘‘power to condition, limit, or deny deductions from gross inAMENDMENT
16—INCOME TAX 1963
47 Helvering v. Ind. L. Ins. Co., 292 U.S. 371, 381 (1934); Helvering v. Winmill,
305 U.S. 79, 84 (1938).
48 A tax on the rental value of property so occupied is a direct tax on the land
and must be apportioned. Helvering v. Ind. L. Ins. Co., 291 U.S. 371, 378–79 (1934).
49 Id. at 381. Expenditures incurred in the prosecution of work under a contract
for the purpose of earning profits are not capital investments, the cost of which, if
converted, must first be restored from the proceeds before there is a capital gain
taxable as income. Accordingly, a dredging contractor, recovering a judgment for
breach of warranty of the character of the material to be dredged, must include the
amount thereof in the gross income of the year in which it was received, rather than
of the years during which the contract was performed, even though it merely represents
a return of expenditures made in performing the contract and resulting in
a loss. The gain or profit subject to tax under the Sixteenth Amendment is the excess
of receipts over allowable deductions during the accounting period, without regard
to whether or not such excess represents a profit ascertained on the basis of
particular transactions of the taxpayer when they are brought to a conclusion.
Burnet v. Sanford & Brooks Co., 282 U.S. 359 (1931).
The grant on denial of deductions is not based on the taxpayers’ engagement
in constitutionally protected activities, and, accordingly, no deduction is granted for
sums expended in combating legislation, enactment of which would destroy taxpayer’s
business. Commarano v. United States, 358 U.S. 498 (1959).
Likewise, when tank truck owners, either intentionally for business reasons or
unintentionally, violate state maximum weight laws, and incur fines, the latter are
not deductible, for fines are penalties rather than tolls for the use of highways, and
Congress is not to be viewed as having intended to encourage enterprises to violate
state policy. Tank Truck Rentals v. Commissioner, 356 U.S. 30 (1958); Hoover Express
Co. v. United States, 356 U.S. 38 (1958).
50 Millinery Corp. v. Commissioner, 350 U.S. 456 (1956).
comes in order to arrive at the net that it chooses to tax.’’ 47 Accordingly,
even though the rental value of a building used by its owner
does not constitute income within the meaning of the Amendment,
48 Congress was competent to provide that an insurance company
shall not be entitled to deductions for depreciation, maintenance,
and property taxes on real estate owned and occupied by it
unless it includes in its computation of gross income the rental
value of the space thus used. 49
Also, a taxpayer who erected a $3,000,000 office building on
land, the unimproved worth of which was $660,000, and who subsequently
purchased the lease on the latter for $2,100,000 is entitled
to compute depreciation over the remaining useful life of the building
on that portion of $1,440,000, representing the difference between
the price and the unimproved value, as may be allocated to
the building; but he cannot deduct the $1,440,000 as a business expense
incurred in eliminating the cost of allegedly excessive rentals
under the lease, nor can he treat that sum as a prepayment of rent
to be amortized over the 21-year period that the lease was to
Diminution of Loss.—Mere diminution of loss is neither gain,
profit, nor income. Accordingly, one who in 1913 borrowed a sum
of money to be repaid in German marks and who subsequently lost
1964 AMENDMENT 16—INCOME TAX
51 Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926).
History of the Income Tax in the United States
Source: Tax Foundation.
The nation had few taxes in its early history. From 1791 to 1802, the United States government was supported by internal taxes on distilled spirits, carriages, refined sugar, tobacco and snuff, property sold at auction, corporate bonds, and slaves. The high cost of the War of 1812 brought about the nation's first sales taxes on gold, silverware, jewelry, and watches. In 1817, however, Congress did away with all internal taxes, relying on tariffs on imported goods to provide sufficient funds for running the government.
In 1862, in order to support the Civil War effort, Congress enacted the nation's first income tax law. It was a forerunner of our modern income tax in that it was based on the principles of graduated, or progressive, taxation and of withholding income at the source. During the Civil War, a person earning from $600 to $10,000 per year paid tax at the rate of 3%. Those with incomes of more than $10,000 paid taxes at a higher rate. Additional sales and excise taxes were added, and an “inheritance” tax also made its debut. In 1866, internal revenue collections reached their highest point in the nation's 90-year history—more than $310 million, an amount not reached again until 1911.
The Act of 1862 established the office of Commissioner of Internal Revenue. The Commissioner was given the power to assess, levy, and collect taxes, and the right to enforce the tax laws through seizure of property and income and through prosecution. The powers and authority remain very much the same today.
In 1868, Congress again focused its taxation efforts on tobacco and distilled spirits and eliminated the income tax in 1872. It had a short-lived revival in 1894 and 1895. In the latter year, the U.S. Supreme Court decided that the income tax was unconstitutional because it was not apportioned among the states in conformity with the Constitution.
In 1913, the 16th Amendment to the Constitution made the income tax a permanent fixture in the U.S. tax system. The amendment gave Congress legal authority to tax income and resulted in a revenue law that taxed incomes of both individuals and corporations. In fiscal year 1918, annual internal revenue collections for the first time passed the billion-dollar mark, rising to $5.4 billion by 1920. With the advent of World War II, employment increased, as did tax collections—to $7.3 billion. The withholding tax on wages was introduced in 1943 and was instrumental in increasing the number of taxpayers to 60 million and tax collections to $43 billion by 1945.
In 1981, Congress enacted the largest tax cut in U.S. history, approximately $750 billion over six years. The tax reduction, however, was partially offset by two tax acts, in 1982 and 1984, that attempted to raise approximately $265 billion.
On Oct. 22, 1986, President Reagan signed into law the Tax Reform Act of 1986, one of the most far-reaching reforms of the United States tax system since the adoption of the income tax. The top tax rate on individual income was lowered from 50% to 28%, the lowest it had been since 1916. Tax preferences were eliminated to make up most of the revenue. In an attempt to remain revenue neutral, the act called for a $120 billion increase in business taxation and a corresponding decrease in individual taxation over a five-year period.
Following what seemed to be a yearly tradition of new tax acts that began in 1986, the Revenue Reconciliation Act of 1990 was signed into law on Nov. 5, 1990. As with the '87, '88, and '89 acts, the 1990 act, while providing a number of substantive provisions, was small in comparison with the 1986 act. The emphasis of the 1990 act was increased taxes on the wealthy.
On Aug. 10, 1993, President Clinton signed the Revenue Reconciliation Act of 1993 into law. The act's purpose was to reduce by approximately $496 billion the federal deficit that would otherwise accumulate in fiscal years 1994 through 1998. In 1997, Clinton signed another tax act. The act, which cut taxes by $152 billion, included a cut in capital-gains tax for individuals, a $500 per child tax credit, and tax incentives for education.
President George W. Bush signed a series of tax cuts into law. The largest was the Economic Growth and Tax Relief Reconciliation Act of 2001. It was estimated to save taxpayers $1.3 trillion over ten years, making it the third largest tax cut since World War II. The Bush tax cut created a new lowest rate, 10% for the first several thousand dollars earned. It also established a slow schedule of incremental tax cuts that would eventually double the child tax credit from $500 to $1,000, adjust brackets so that middle-income couples owed the same tax as comparable singles, cut the top four tax rates (28% to 25%; 31% to 28%; 36% to 33%; and 39.6% to 35%).
The Jobs and Growth Tax Relief and Reconciliation Act of 2003 accelerated the tax rate cuts that had been enacted in 2001, and temporarily reduced the tax rate on capital gains and dividends to 15%. In 2004, the U.S. was forced to eliminate a corporate tax provision that had been ruled illegal by the World Trade Organization. Along with that tax hike, Congress passed a cornucopia of tax breaks, which for individuals included an option to deduct the payment of whichever state taxes were higher, sales or income taxes.
Two tax bills signed in 2005 and 2006 extended through 2010 the favorable rates on capital gains and dividends that had been enacted in 2003, raised the exemption levels for the Alternative Minimum Tax, and enacted new tax incentives designed to persuade individuals to save more for retirement.
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- Sid Harth
- July 6, 2012, 7:14 p.m. ET
Paul Moreno: A Short History of Congress's Power to Tax
The Supreme Court has long distinguished the regulatory from the taxing power.
By PAUL MORENO
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.
Congress enacted very few taxes up to the end of the Civil War, and none that was a pretext for regulating things that the Constitution gave it no power to regulate. True, the purpose of tariffs was to protect domestic industry from foreign competition, not raise revenue. But the Constitution grants Congress a plenary power to regulate commerce with other nations.
Congress also enacted a tax to destroy state bank notes in 1866, but this could be seen as a "necessary and proper" means to stop the states from usurping Congress's monetary or currency power. It was upheld in Veazie Bank v. Fenno (1869).
The first unabashed use of the taxing power for regulatory purposes came when Congress enacted a tax on "oleomargarine" in 1886. Dairy farmers tried to drive this cheaper butter substitute from the market but could only get Congress to adopt a mild tax, based on the claim that margarine was often artificially colored and fraudulently sold as butter. President Grover Cleveland reluctantly signed the bill, saying that if he were convinced the revenue aspect was simply a pretext "to destroy . . . one industry of our people for the protection and benefit of another," he would have vetoed it.
Congress imposed another tax on margarine in 1902, which the Supreme Court upheld (U.S. v. McCray, 1904). Three justices dissented, but without writing an opinion.
Then, in 1914, Congress imposed taxes on druggists' sales of opiates as a way to regulate their use. Five years later, in U.S. v. Doremus , the Supreme Court upheld the levy under Congress's express power to impose excise taxes.
Then, 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.
Mr. Moreno is a professor of history at Hillsdale College and the author of "The American State from the Civil War to the New Deal," forthcoming from Cambridge University Press.