United States v. Butler
297 U.S. 1 (1936)
Author: Joe

Facts: Congress enacted the Agricultural Adjustment Act in the New Deal era to stabilize farm prices.  Secretary of Agriculture was given to power to make contracts with farmers to reduce their productive acreage and in return the farmers received benefit payments.  In order to pay for this program, Congress enacted processing tax on domestic processing of certain commodities.

Procedure: Lower court ruled this act to be unconstitutional.

Issue: Can the taxing power of the Congress be used to make payments in a field that is reserved for the states?

Holding: No

Rule: Article I § 8: Congress has power to lay and collect Taxes, Duties, Imposts and Excises, to pay the debts and provide for the defense and general welfare of the United States.

Rationale:  In Child Labor Tax Case, it was held that Congress cannot lay tax to regulate in a area reserved for the states. Likewise, taxing power cannot be employed to raise the money necessary to purchase a compliance which the Congress is powerless to command.  The provisions of the program are not voluntary, as the Government argues them to be.  The farmer is either given the choice of accepting the program or to suffer financial ruin.  This is economic coercion.  Affirmed.