Taxing and Police Powers Under the Tenth Amendment

The Tenth Amendment states:

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

In early Tenth Amendment cases, the Supreme Court examined federal taxing power and federal police power.

Federal Taxing Power

United States Library of Congress, The Constitution of the United States of America: Analysis and Interpretation

Not until after the Civil War was the idea that the reserved powers of the states comprise an independent qualification of otherwise constitutional acts of the Federal Government actually applied to nullify, in part, an act of Congress. This result was first reached in a tax case, Collector v. Day.¹ Holding that a national income tax, in itself valid, could not be constitutionally levied upon the official salaries of state officers, Justice Nelson made the sweeping statement that the States within the limits of their powers not granted, or, in the language of the Tenth Amendment, ‘reserved,’ are as independent of the general government as that government within its sphere is independent of the States.²

In 1939, Collector v. Day was expressly overruled.³ Nevertheless, the problem of reconciling state and national interest still confronts the Court occasionally, and was elaborately considered in New York v. United States,⁴ where, by a vote of six-to-two, the Court upheld the right of the United States to tax the sale of mineral waters taken from property owned by a state. Speaking for four members of the Court, Chief Justice Stone justified the tax on the ground that the national taxing power would be unduly curtailed if the State, by extending its activities, could withdraw from it subjects of taxation traditionally within it.⁵

Justices Frankfurter and Rutledge found in the Tenth Amendment no restriction upon Congress to include the States in levying a tax exacted equally from private persons upon the same subject matter.⁶ Justices Douglas and Black dissented, saying: If the power of the Federal Government to tax the States is conceded, the reserved power of the States guaranteed by the Tenth Amendment does not give them the independence which they have always been assumed to have.⁷

Federal Police Power

A year before Collector v. Day was decided, the Court held invalid, except as applied in the District of Columbia and other areas over which Congress has exclusive authority, a federal statute penalizing the sale of dangerous illuminating oils.⁸ The Court did not refer to the Tenth Amendment. Instead, it asserted that the express grant of power to regulate commerce among the States has always been understood as limited by its terms; and as a virtual denial of any power to interfere with the internal trade and business of the separate States; except, indeed, as a necessary and proper means for carrying into execution some other power expressly granted or vested.⁹

Similarly, in the Employers’ Liability Cases,¹⁰ an act of Congress making every carrier engaged in interstate commerce liable to any employee, including those whose activities related solely to intrastate activities, for injuries caused by negligence, was held unconstitutional by a closely divided Court, without explicit reliance on the Tenth Amendment. Not until it was confronted with the Child Labor Law, which prohibited the transportation in interstate commerce of goods produced in establishments in which child labor was employed, did the Court hold that the state police power was an obstacle to adoption of a measure which operated directly and immediately upon interstate commerce. In Hammer v. Dagenhart,¹¹ five members of the Court found in the Tenth Amendment a mandate to nullify this law as an unwarranted invasion of the reserved powers of the states. This decision was expressly overruled in United States v. Darby.¹²

During the twenty years following Hammer v. Dagenhart, a variety of measures designed to regulate economic activities, directly or indirectly, were held void on similar grounds. Excise taxes on the profits of factories in which child labor was employed,¹³ on the sale of grain futures on markets which failed to comply with federal regulations,¹⁴ on the sale of coal produced by nonmembers of a coal code established as a part of a federal regulatory scheme,¹⁵ and a tax on the processing of agricultural products, the proceeds of which were paid to farmers who complied with production limitations imposed by the Federal Government,¹⁶ were all found to invade the reserved powers of the states. In Schechter Poultry Corp. v. United States,¹⁷ the Court, after holding that the commerce power did not extend to local sales of poultry, cited the Tenth Amendment to refute the argument that the existence of an economic emergency justified the exercise of what Chief Justice Hughes called extraconstitutional authority.¹⁸

Footnotes:

1.    78 U.S. (11 Wall.) 113 (1871).

2.    78 U.S. at 124.

3.    Graves v. New York, 306 U.S. 466 (1939). The Internal Revenue Service is authorized to sue a state auditor personally and recover from him an amount equal to the accrued salaries which, after having been served with notice of levy, he paid to state employees delinquent in their federal income tax. Sims v. United States, 359 U.S. 108 (1959).

4.    326 U.S. 572 (1946).

5.    326 U.S. at 589.

6.    326 U.S. at 584.

7.    326 U.S. at 595. The issue was canvassed, but inconclusively, in Massachusetts v. United States, 435 U.S. 444 (1978).

8.    United States v. Dewitt, 76 U.S. (9 Wall.) 41 (1870).

9.    76 U.S. at 44.

10. 207 U.S. 463 (1908). See also Keller v. United States, 213 U.S. 138 (1909).

11. 247 U.S. 251 (1918).

12. 312 U.S. 100 (1941).

13. Child Labor Tax Case, 259 U.S. 20, 26, 38 (1922).

14. Hill v. Wallace, 259 U.S. 44 (1922). See also Trusler v. Crooks, 269 U.S. 475 (1926).

15. Carter v. Carter Coal Co., 298 U.S. 238 (1936).

16. United States v. Butler, 297 U.S. 1 (1936).

17. 295 U.S. 495 (1935).

18. 295 U.S. at 529.