The Taxing and Spending Clause
Article 1, Section 8, expressly grants to the Federal Government the “Power to lay and collect Taxes, Duties, Imports, and Excises.”
The taxing and spending power allows for the funding of Federal Government operations. The ability to tax is limited by the requirement that all taxes be uniformly applicable to all individuals.
• Discussion: Can you think of a recent, landmark Supreme Court decision affecting health care that turned on the Taxing and Spending Power?
Article 1, Section 8 further allows the Federal Government to “Pay the debts and provide for the common Defense and general Welfare of the US.”
This authority allows the Federal Government to incur and manage domestic and foreign debt. It also allows for the formation of the military and funding of the military defense budget.
• Discussion: Through what process does the United States incur foreign debt? What portion of the total revenue collected from taxes within the United States is allocated to defense spending? How does this compare to other countries in the world?
• Practice Question: The Federal Government seeks to determine automobile use parameters across the US. To begin the process, the Federal Government passes a law requiring individuals to register their vehicle as part of a national sales tax exemption program. Registering the vehicle will allow individuals to avoid a federal ad valorem tax on the value of the vehicle. Failure to register the vehicle will result in a 1% annual tax being assessed against the vehicle. The tax will be payable as part of the federal income tax return. Does the Federal Government have the authority to assess this tax penalty for failure to register a vehicle? Explain.