The Taxing and Spending Clause authorizes Congress to lay taxes for federal debts, the common defense, and the general welfare. Under the Export Clause, Congress may not tax articles exported from any state. This prohibits direct taxes on individuals unless apportioned on the basis of the population of each state.
Congressional Limitations and Authorities
Limitations on Congress’s Taxing Power
- Congress may not tax exports.
- Direct taxes must be apportioned among the States, according to their populations.
- Congress cannot give preference to any state’s seaport.
- Government money can only be spent by passing a law.
- Congress cannot issue titles of nobility.
Powers Granted to Congress
- The Constitution grants Congress the sole authority to enact legislation and declare war, the right to confirm or reject many Presidential appointments, and substantial investigative powers.
Financial Capabilities of Congress
What are the different methods the Federal Government can use to borrow money:
- Issuing government securities;
- Borrowing from financial institutions;
- Borrowing from foreign governments.
Constitutional Amendments and Interpretations
In 1913, the Sixteenth Amendment to the Constitution was adopted, overruling a previous court ruling, and Congress then levied an income tax on both corporate and individual incomes.
Congressional Restrictions
What Congress cannot do:
- Congress cannot directly tax the people unless those taxes are proportionate with the populations of their respective states (see the 16th Amendment).
- Congress cannot place a tax on goods going from one state to another.
IRS and Revenue Raising
Who controls the IRS? It is part of the Department of the Treasury and led by the Commissioner of Internal Revenue, who is appointed to a five-year term by the President of the United States.
How does Congress raise taxes? The Constitution says that “all bills for raising revenue shall originate in the House of Representatives” and that “Congress shall have power to lay and collect taxes.”
Export Clause and Domestic Preferences
No Tax or Duty shall be laid on Articles exported from any State. No Preference shall be given by any Regulation of Commerce or Revenue to the Ports of one State over those of another: nor shall Vessels bound to, or from, one State, be obliged to enter, clear, or pay Duties in another.
By the terms of the Constitution, the power of Congress to levy taxes is subject to but one exception and two qualifications. The states proved unable to solve these difficulties on their own.