Paul Moreno: A Short History of Congress's Power to Tax

Wall Street Journal ^ | 07/06/2012 | Paul Moreno

[iowamark]

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."...

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)...

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...

[iowamark]

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.

[BenLurkin]

The idea that because Congress has to power to tax means that it has the authorty to do anything it wants with those taxes is insane.

[grobdriver]

provide for the common defense and general welfare

We today regret the wording of that whole "general welfare" thing.

[BenLurkin]

It was and remains obviously precatory. Only the cyncism of the left permits them to cast it in a false light; one whch they themselves must know is false.