Tax collection is an important way for governments to generate revenue to fund public services. However, tax powers can be a double-edged sword. Excessive taxation has drawn public ire several times in the history of Western civilization, and tax issues were the main motivation behind the Boston Tea Party — an event that helped spark the American Revolution.  The governmental problems that led to the separation of the American colonies from England are reflected in the limited authority that the Constitution grants to the federal government, particularly with respect to taxing powers. The Supreme Court has gone back and forth about the extent to which Congress has the power to levy taxes to achieve regulatory goals. This is particularly true when the federal government uses its fiscal powers to advance policy agendas that would otherwise be outside the scope of its enumerated powers. Early in American history, federal tax powers were severely limited. However, modern reform has changed this considerably. An expansionary fiscal policy implies an increase in public spending and a decrease in tax revenues, possibly through lower tax rates. Governments are using expansionary fiscal policies to stimulate growth after the recession. Prices are rising and unemployment is falling. Meanwhile, people have more money in their pockets and can spend more freely.
In the past, the Supreme Court has been reluctant to allow the federal government to use its financial sovereignty in a way that interferes with traditional state roles. States have the right to establish policies concerning health, safety and well-being at the local level. However, modern tax policy has moved towards a broader scope of federal financial sovereignty. This change is particularly evident in the Supreme Court`s decisions on the Patient Protection and Affordable Care Act of 2010.  Perhaps the most serious problem facing the nascent nation under the articles was that the national government did not have the power to directly tax individuals; In fact, he had no effective way to raise funds. Instead, it limited itself to „requisitioning“ (i.e. asking) states to pay their fair share of tax revenues to the Treasury in order to repay the debts of the War of Independence and finance the national government. Instead of complying with those requirements, States had freely benefited from the contributions of fraternal States. As a result, the national government was severely underfunded, which (among other things) posed a serious threat to national security. The majority did not explicitly address the first factor used by the Court in Drexel Furniture Co. to conclude that the child labour tax was a punishment for constitutional purposes – regardless of whether the CBA establishes a specific and detailed course of action and imposes a penalty on those who have violated its standard.
However, the majority applied a functional approach that examined the content of the prosecution and the motion to find that it was a tax and not a penalty for constitutional purposes.41 to 565 (cited United States v. Constantine, 296 U.S. 287, 294 (1935)). The court found that the lawsuit resembled a tax in many respects.42 at 563. The Court found that the action is listed in the Internal Revenue Code (IRC); IRC is under the obligation to pay the refund; the Internal Revenue Service (IRS) enforces the lawsuit; the IRS assesses and collects the debt in the same way as taxes; The lawsuit does not apply to people who do not owe federal income tax because their income is below the filing threshold. taxpayers remit the payment to the General Fund of the Ministry of Finance when they file their income tax return; The application is based on well-known factors such as taxable income, registration status and number of dependents; and collection produces the essential factor of any tax: it brings in at least some revenue for the government.43FootnoteNFIB, 567 U.S. to 563–64. Moreover, in distinguishing penalties from taxes for constitutional purposes, the Court stated that if the notion of punishment means anything, it means punishment for an unlawful act or omission. 44FootnoteId., p. 567 (cited in United States v. Reorganized CF&I Fabricators of Utah, Inc., 518 U.S.
213, 224 (1996)). The Court noted that, apart from the action itself, there are no other negative legal consequences to not purchasing health insurance.45FootnoteId. at 568. The majority discussion suggests that, for constitutional reasons, the importance of regulatory motivations for tax rules may become less important than the type of levies imposed and how they are administered. American democracy operates according to the doctrine of separation of powers, enshrined in the U.S. Constitution. In the federalist system established by the founding documents of the nation, the boundaries of jurisdiction create clear divisions. Federal, state, and local governments all have the power to levy taxes, but that power is limited. This module explains how and when tax powers are limited, particularly in light of recent major changes in national tax policy. Sixth, taxes must be levied „for the common good.“ A careful reading of section eight of Article I suggests that the ceiling actually limits purchasing power, not fiscal capacity. Interestingly, in NFIB v. Sebelius (2012), Justice Ginsburg discussed the general welfare restriction that applies to both taxation and spending.
In contrast, Chief Justice Roberts discussed the restriction twice, but only in terms of purchasing power. In any case, this restriction is easy to comply with and therefore largely irrelevant. More recently, National Federation of Independent Business (NFIB) v. Sebelius,37 note 567 U.S. ___, No. 11-393, folio op. cit. (2012). The Court upheld a requirement of the Patient Protection and Affordable Care Act (ACA)38 FootnotePub as an exercise of tax authority. L. n° 111-148, as amended.
This requires some people to maintain a minimum level of health insurance. Failure to take out health insurance may expose a person to a fine governed by tax legislation. Roberts C.J., majority,39 footnoteFor this part of the opinion, Justice Roberts was accompanied by Ginsburg, Breyer, Sotomayor and Kagan JJ. uses a functional approach in the Agency`s assessment of the requirement, such that the use of the term „penalty“ in ACA40 footnote 26 U.S.C. §§ 5000A(c), (g)(1). The description of the mechanism for the implementation of the individual mandate did not prove decisive. The Court also found that the last three factors identified in the case of child labour tax (criminal intent, science, enforcement by the regulator) were not present in relation to the individual mandate. Unlike the child labour tax system, the level of taxation under the CBA is determined based on traditional tax variables such as taxable income, number of dependents, and joint reporting status. there is no requirement for deliberate infringement; and the tax is collected by the Internal Revenue Service. In 2012, NFIB v. Sebelius (the health case), the court clarified much of the confusion.
He declined to focus on the primary purpose of the required payment in question, noting that in America, „taxes that seek to influence behavior are not new. Some of our first federal taxes were intended to prevent the purchase of imported industrial products in order to promote the growth of domestic industry. Instead of considering the main purpose of the required payment, the court took a „functional approach“ and considered whether the payment was a tax or a penalty on the „convenience features“ and likely impact of the payment. In areas where activities are subject to both taxation and regulation, tax administration is not limited to carrying out activities that are otherwise prohibited. For example, Congress may tax an activity, such as the activity of taking bets,42 footnote, United States v. Kahriger, 345 U.S. 22 (1953). Differently, Judge Frankfurter stated that this was not a bona fide tax, but essentially an attempt to review, or even eradicate, professional gambling, an activity that was the responsibility of States. Jackson and Douglas JJ. reached a partial agreement with this conclusion. See also Lewis v. United States, 348 U.S.
419 (1955). if U.S. law43 FootnoteUnited States v. Yuginovich, 256 U.S. 450 (1921). or by those of a State.44 footnoteUnited States v. Constantine, 296 U.S. 287, 293 (1935). Congress` power to regulate fiscal power, however, „extends only to existing matters.“ 45 FootnotesTax Cases Relating to Licensing, 72 United States (5 Mur.) 462, 471 (1867). Thus, so-called federal licenses, insofar as they relate to matters not within the constitutional authority of Congress, merely express „the government`s purpose not to interfere.
with trade nominally authorized if the required taxes are paid. Whether „licensed“ trade should be permitted in this case is one that remains a decision of the state.46 FootnoteLicense Tax Cases, 72 U.S.