The Agricultural Adjustment Act of 1933 declared that, due to a crisis in agricultural production, the Secretary of Agriculture could set limits on production of certain crops and impose taxes on production in excess of these limits.
The AAA also authorized grants to farmers to control production and thus regulate prices.
SCOTUS held for Butler, AAA unconstitutional.
Does the AAA overstep Congress's constitutional power to tax and spend?
What is the scope of Congress's taxing and spending power?
Does the 10th Amendment place any limits on Congress's taxing and spending power
Congress has broad authority to tax and spend for the general welfare, and is not limited to taxing and spending only to carry out powers specifically enumerated in Article I.
Article 1, § 8 of the Constitution authorizes Congress the power "to lay and collect Taxes, Duties, Imposts and Excises to pay the debts and provide for the common defense and general welfare."
"To provide for the general welfare" qualifies the power "to lay and collect taxes."
The meaning of this phrase has always been debated.
Madison always said it just referred to the other powers enumerated in the section and so therefore the power to tax was confined to the enumerated legislative fields committed to Congress. It is a mere tautology.
Hamilton, however, maintained that the clause confers separate and distinct power, and so Congress has a substantive power to tax and to appropriate, limited only by the requirement that it shall be exercised to provide for the general welfare of the United States.
The second meaning, advocated by Justice Story, is the correct one. While the power to tax is not unlimited, its confines are set in the clause which confers it, and not those of section 8, which bestow and define the legislative powers of Congress.
The power of Congress to authorize expenditure of public money for public purposes is not limited by the direct grants of legislative power found in the Constitution.
Another principle in the Constitution, however, prohibits the enforcement of the AAA. The act invades the reserved rights of the states, since it controls agricultural production.
The taxes are means to an unconstitutional end.
Congress has no power to regulate production, therefore it cannot indirectly accomplish regulation through taxing and spending.
Courts are concerned only with the power to enact statutes, not with their wisdom.
The Constitutional power of Congress to levy an excise tax on the processing of agricultural products is not questioned.
There is no basis for saying that the expenditure of public money in aid of farmers is not within the specifically granted power of Congress to levy taxes to "provide for the . . . General welfare."
This levy is not any less an exercise of taxing power because it is intended to defray an expenditure for the general welfare rather than for some other support of government.