Social Security Act Cases

Social Security Act Cases (Scope of Power to Tax)

Although the Court in Butler held that the spending power is not limited by the specific grants of power contained in Article I, § 8, the Court found, nevertheless, that the spending power was qualified by the Tenth Amendment, and on this ground ruled that Congress could not use moneys raised by taxation to “purchase compliance” with regulations “of matters of state concern with respect to which Congress has no authority to interfere.” 1 Within little more than a year this decision was narrowed by Steward Machine Co. v. Davis,2 which sustained the tax imposed on employers to provide unemployment benefits, and the credit allowed for similar taxes paid to a state. To the argument that the tax and credit in combination were “weapons of coercion, destroying or impairing the autonomy of the states,” the Court replied that relief of unemployment was a legitimate object of federal expenditure under the “general welfare” clause, that the Social Security Act represented a legitimate attempt to solve the problem by the cooperation of state and Federal Governments, and that the credit allowed for state taxes bore a reasonable relation “to the fiscal need subserved by the tax in its normal operation,” 3 because state unemployment compensation payments would relieve the burden for direct relief borne by the national treasury. The Court reserved judgment as to the validity of a tax “if it is laid upon the condition that a state may escape its operation through the adoption of a statute unrelated in subject matter to activities fairly within the scope of national policy and power.” 4

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References

This text about Social Security Act Cases is based on “The Constitution of the United States of America: Analysis and Interpretation”, published by the U.S. Government Printing Office.

[Footnote 1] United States v. Butler, 297 U.S. 1, 70 (1936). Justice Stone, speaking for himself and two other Justices, dissented on the ground that Congress was entitled when spending the national revenues for the general welfare to see to it that the country got its money's worth, and that the challenged provisions served that end. United States v. Butler, 297 U.S. 1, 84-86 (1936).

[Footnote 2] 301 U.S. 548 (1937).

[Footnote 3] 301 U.S. at 586, 591.

[Footnote 4] 301 U.S. at 590. See also Buckley v. Valeo, 424 U.S. 1, 90-92 (1976); Fullilove v. Klutznick, 448 U.S. 448, 473-475 (1980); Pennhurst State School & Hosp. v. Halderman, 451 U.S. 1 (1981).

Tables of Contents

• Social Security Act Cases 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
• Social Security Act Cases and other Topics in the Constitution Contents
• Interpretation of the U.S. Constitution (Table of Contents)
• Clauses of the Constitution (Table of Contents)