The Constitution limits the federal government’s power, but it does give Congress the power to levy taxes. So Congress has historically used its taxing authority to pre-empt state laws and to exercise control over its citizens’ behavior. George Will discusses an essay by David B. Kopel and Trevor Burrus entitled “Sex, Drugs, Alcohol, Gambling and Guns: The Synergistic Constitutional Effects.”From George Will:
Kopel and Burrus, both associated with Washington’s libertarian Cato Institute, cite the 1914 Harrison Narcotics Act, which taxed dealings involving opium or coca leaves, as an early example of morals legislation passed using Congress’s enumerated taxing power as a pretext. In 1919, the Supreme Court held that the law “may not be declared unconstitutional because its effect may be to accomplish another purpose as well as the raising of revenue.”
Its “effect”? The effect of suppressing the drug business obviously was its purpose. Nevertheless, the court held that even if “motives” other than raising revenue really explained Congress’s exercise of its enumerated power, the law still could not be invalidated “because of the supposed motives which induced it.”
“Supposed”? The court’s refusal to reach a reasonable conclusion about the pretext Congress used in this case for trespassing on territory reserved to the states enabled the federal government to begin slipping its constitutional leash. In 1922, Chief Justice William Howard Taft warned that Congress could seize control of “the great number of subjects” reserved to the states by the 10th Amendment by imposing a “so-called tax” on any behavior it disapproved of: “To give such magic to the word ‘tax’ would be to break down all constitutional limitation of the powers of Congress and completely wipe out the sovereignty of the states.”
So, a 1934 law imposed a $200 tax on the making and transfer of certain guns. Supreme Court Justice Harlan Fiske Stone complacently said that any act of Congress “which, on its face, purports to be an exercise of the taxing power” should be treated as such, without judicial inquiring into any “hidden motives” Congress had. “Hidden”?
Congress responded to this “abdication of judicial scrutiny” (Kopel’s and Burrus’s correct characterization) with the 1937 Marihuana Tax Act, another supposed tax law actually designed not to raise revenue but to legislate morality by changing behavior. The 1951 Revenue Act taxed “persons engaged in the business of accepting wagers” and required them “to register with the Collector of Internal Revenue.” The IRS was becoming the enforcer of laws to make Americans better behaved, as judged by their betters in the federal government.
Note the complicity of the Supreme Court in all of this, including, of course, the construing of Obamacare penalties as a tax.