Power to Tax and Spend

Clause 1. Congress Power to Tax and Spend

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.

Taxes Permitted: Uniformity Requirement

Whether a tax is to be apportioned among the states according to the census taken pursuant to Article I, § 2, or imposed uniformly throughout the United States depends upon its classification as direct or indirect.1 The rule of uniformity for indirect taxes is easy to obey. It requires only that the subject matter of a levy be taxed at the same rate wherever found in the United States; or, as it is sometimes phrased, the uniformity required is “geographical,” not “intrinsic.” 2 Even the geographical limitation is a loose one, at least if one follows United States v. Ptasynski,3 in which the Court upheld an exemption from a crude-oil windfall-profits tax of “Alaskan oil,” defined geographically to include oil produced in Alaska (or elsewhere) north of the Arctic Circle. What is prohibited, the Court said, is favoritism to particular states in the absence of valid bases of classification. Because Congress could have achieved the same result, allowing for severe climactic difficulties, through a classification tailored to the “disproportionate costs and difficulties . . . associated with extract ing oil from this region,” 4 the fact that Congress described the exemption in geographic terms did not condemn the provision.

More about Power to Tax and Spend

The clause accordingly places no obstacle in the way of legislative classification for the purpose of taxation, nor in the way of what is called progressive taxation.5 A taxing statute does not fail of the prescribed uniformity because its operation and incidence may be affected by differences in state laws.6 A federal estate tax law that permitted deduction for a like tax paid to a state was not rendered invalid by the fact that one state levied no such tax.7 The term “United States” in this clause refers only to the states of the Union, the District of Columbia, and incorporated territories. Congress is not bound by the rule of uniformity in framing tax measures for unincorporated territories.8 Indeed, in Binns v. United States,9 the Court sustained license taxes imposed by Congress but applicable only in Alaska, where the proceeds, although paid into the general fund of the Treasury, did not in fact equal the total cost of maintaining the territorial government.

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References

This text about Power to Tax and Spend is based on “The Constitution of the United States of America: Analysis and Interpretation”, published by the U.S. Government Printing Office.

[Footnote 1] See also Article I, § 9, cl. 4.

[Footnote 2] LaBelle Iron Works v. United States, 256 U.S. 377 (1921); Brushaber v. Union Pac. R.R. Co., 240 U.S. 1 (1916); Head Money Cases, 112 U.S. 580 (1884).

[Footnote 3] 462 U.S. 74 (1983).

[Footnote 4] 462 U.S. at 85.

[Footnote 5] Knowlton v. Moore, 178 U.S. 41 (1900).

[Footnote 6] Fernandez v. Wiener, 326 U.S. 340 (1945); Riggs v. Del Drago, 317 U.S. 95 (1942); Phillips v. Commissioner, 283 U.S. 589 (1931); Poe v. Seaborn, 282 U.S. 101, 117 (1930).

[Footnote 7] Florida v. Mellon, 273 U.S. 12 (1927).

[Footnote 8] Downes v. Bidwell, 182 U.S. 244 (1901).

[Footnote 9] 194 U.S. 486 (1904). The Court recognized that Alaska was an incorporated territory but took the position that the situation in substance was the same as if the taxes had been directly imposed by a territorial legislature for the support of the local government.

Tables of Contents

• Power to Tax and Spend and other Topics in the Contents – Article 1 of the U.S. Constitution
• U.S. Constitutional Law Category
• List of amendments to the U.S. Constitution
• Power to Tax and Spend and other Topics in the Constitution Contents
• Interpretation of the U.S. Constitution (Table of Contents)
• Clauses of the Constitution (Table of Contents)