"Uniform throughout the United States": limits on taxing as limits on spending.

• Author: Claus, Laurence

The power to spend sits oddly alongside the diminutive list of regulatory powers with which the United States Constitution invests the nation's legislature. If Congress may harness the wealth of the nation to regulate any subject, why the bother with an elaborate apportionment of regulatory responsibility between nation and states? What principles will reconcile the power to spend with the federal framework? I begin by recognizing that the power to spend ultimately derives from the power to tax, and that the constitutional text has similar things to say about the exercise of each. Taxation must be "uniform throughout the United States." (1) Spending must provide for the "common Defence and general Welfare of the United States." (2) Both powers, then, seem to be subject to a limitation upon discriminatory use. And for either of those limitations to operate effectively, the other must too, and in a congruent way. A requirement not to discriminate in what one takes is emptied by freedom to discriminate in what one gives, and vice versa.

A prohibition of discrimination, not of coercion, is the Constitution's principal limitation upon the federal power to tax and spend. A vigorous antidiscrimination principle, however, does illuminate the line between conditions on taxing and spending which persuade and those which effectively coerce. After recounting the ways in which the Supreme Court has shriveled the Constitution's exhortation against discrimination on either side of the federal fiscal ledger, I conclude that a reinvigorated appreciation of the power to spend depends upon a reinvigorated understanding of the constitutional requirement that taxation be uniform throughout the United States.

1. THE PROBLEM WITH DOLE

   In South Dakota v. Dole (3) the Supreme Court expounded the scope of Congress's power "to ... provide for the common Defence [sic] and general Welfare of the United States," and left it looking limitless. Chief Justice Rehnquist's opinion for seven Justices upheld federal legislation which directed the Secretary of Transportation to withhold 5% of federal highway construction funds from any state "in which the purchase or public possession ... of any alcoholic beverage by a person who is less than twenty-one years of age is lawful." (4)

   The Court began with the well-settled proposition 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." (5) There were, however, some limitations on use of the power to make payments to the states. Most obviously, there was the language through which it was conferred: spending must "provide for the common Defence and general Welfare of the United States." (6) Second, conditions on spending must be unambiguous. (7) Third, conditions on spending must relate "to the federal interest in particular national projects or programs." (8) And fourth, other constitutional provisions might impose "an independent bar to the conditional grant of federal funds." (9) The Chief Justice's opinion also suggested a fifth limitation--that some conditions might shift some spending from permissible persuasion to (apparently) impermissible coercion. (10) None of these limitations, however, caused the Court to impugn the legislation at issue.

   Conditional spending analysis both in the Court and in the academy (11) has focused on the problem of coercion, and this focus has lured Court and commentators alike to ask the wrong question. Focus on Dole's first limitation reveals that a construction of "common Defence and general Welfare of the United States" which coheres with the rest of Art. I, [section], cl. 1 has dramatic implications for the scope of the federal spending power. Consider the words in the context in which they appear:

   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[.] (12) The Dole Court concluded that in construing the critical phrase, "courts should defer substantially to the judgment of Congress." (13) This may seem sensible when the question is whether spending furthers the "Defence" or "Welfare" of the United States, but should courts be similarly unwilling to ask whether spending is requisitely "common" or "general"? Each question invites inquiry into substance--in the cases of defense and welfare, into the nature of the social good, implicating both factual and philosophical understanding; in the cases of commonality and generality, into the distinctions that are permissible when providing for defense and welfare. Constitutional requirements of commonality and generality necessarily imply that some category of distinctions in spending is impermissible. The question prompted by their presence in the constitutional text is not whether an antidiscrimination principle limits federal spending, but what kind of discrimination that palpably-present principle precludes. (14)

   This question belongs to the genre of "equality" inquiries that courts have often pursued under the rubric of equal protection, and that have also been held justiciable when their subject is taxation. If courts are willing to decide what kind of discrimination is precluded by a requirement that federal taxation be "uniform throughout the United States," why should they not similarly decide what kind of discrimination is precluded by a requirement that federal spending be "common" and "general"? If the two kinds of discrimination are not the same, then the possibility of effective operation for either is limited to the extent of any overlap. This observation about effective operation does not resolve the interpretative question, but an "intratextualist" approach to interpretation (15) would recognize two implications. First, either courts should decide both what uniformity of taxation requires and what commonality and generality of spending require, or courts should leave both questions alone. And second, when any branch of government considers whether a kind of discrimination in taxing is precluded by the uniformity requirement and whether the same kind of discrimination in spending is precluded by the commonality and generality requirements, that branch should give those questions the same answer. The requirements of uniformity, commonality, and generality should be understood to target the same kind of discrimination. In other words, "common," "general," and "uniform" should be understood as three qualifiers designed to do different parts of the same job, namely to ensure that federal taxing and spending do not distribute burdens and benefits to the people of the United States according to an unlawfully discriminatory criterion. If the prohibited criterion for taxing differs from that for spending, then the extent of the difference undermines the anti-discrimination limitations on taxing and spending. But in order for the prohibited criterion to be the same for taxing and spending, it must have a content which plausibly constrains both.

   In this article, I suggest that the criterion prohibited by uniformity, commonality, and generality is state political identity. Federal taxing and spending cannot validly differ among citizens of the United States by reference to the political identities of their states. Thus, validity of conditional spending turns not on its coercive effect, that is, on how much a prospective beneficiary needs the money offered, but on whether that money is being offered on terms which discriminate among ultimate beneficiaries according to the political identities of the places where they live, travel, own property, or do business.

   A conclusion that courts should leave to Congress the questions of uniformity, commonality, and generality would not, of course, diminish in any way the duty of legal scholars to explore the content of those concepts. Analysis of what controlling constitutional language may mean retains its importance whoever its target audience of decisionmakers may be.

2. THE REQUIREMENT OF UNIFORMITY

   The presence of an antidiscrimination principle limiting federal fiscal behavior has received much more attention on the taxation side. Uniformity throughout the United States has been recognized by the Supreme Court to require uniformity of rate structure, not throughout the range of transactions or the kinds of income which may be subjected to taxation, but throughout the United States. Until 1983, the Court's jurisprudence clearly suggested that the federal tax regime faced by citizens could not vary from state to state.

   1. THE TAXES WHICH MUST BE UNIFORM

      The current major sources of federal revenue, notably the federal income taxes, are subject to this uniformity requirement. "Direct" taxes are not subject to it, for the Constitution requires of them a different kind of uniformity, namely uniformity of amount per counted person. (16) In Pollock v. Farmers' Loan and Trust Co., (17) the Supreme Court distinguished between taxation of income derived from property (that is, taxation of rents, dividends, and interest), which it held to be "direct," and taxation of income derived from activity ("professions, trades, employments, or vocations"), (18) which it held to be indirect. The Court had recognized as early as 1796 that compliance with the apportionment requirement was probably more trouble than direct taxation was worth, (19) and an exasperated nation responded with the sixteenth amendment. (20) Thereafter, the Supreme Court decided to treat all federal income taxes as "indirect" and therefore subject to the uniformity requirement in Art. 1 [section] cl. 1. Explaining this understanding took just one of Chief Justice White's marathon sentences:

      [T]he contention that the Amendment treats a tax on income as a direct tax although it is...