United States v. Butler

Supreme Court of the United States · 1936 · Constitutional Law

297 U.S. 1 (1936)

Updated July 29, 2026

Constitutional LawTaxing and Spending Clausegeneral welfareTenth Amendmentreserved powersagricultural productionunconstitutional conditionspretext

Facts

Title I of the Agricultural Adjustment Act sought to raise farmers' purchasing power by reducing production of basic agricultural commodities and restoring parity prices. The Act authorized the Secretary of Agriculture to make rental or benefit payments to farmers who agreed to reduce acreage or production, and it imposed processing and floor taxes on commodities such as cotton to fund those payments. The Secretary proclaimed that payments would be made with respect to cotton and fixed processing and floor tax rates accordingly. The United States then sought to collect those taxes from the receivers of Hoosac Mills Corporation.

Issue

May Congress, under its power to tax and spend for the general welfare, impose processing taxes and use the proceeds to pay farmers who agree to reduce agricultural production? More specifically, may Congress use taxation and appropriations to induce compliance with a federal regulatory scheme governing agricultural production, a matter reserved to the states?

Rule

The power to tax and to appropriate for the general welfare is a substantive federal power, not limited by the other enumerated legislative powers. But Congress may not, under the pretext of exercising the taxing and spending power, adopt measures whose real aim is to regulate and control subjects reserved to the states; a tax and appropriation that are merely means to an unconstitutional end are invalid.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Prairie Loom Textiles, a processor in Wichita, Kansas, is assessed a federal "fiber processing tax" on its first processing of flax. The statute directs that every dollar collected be paid to flax growers who sign contracts with the Secretary of Agriculture agreeing to leave part of their acreage idle for one season, and the tax begins and ends whenever those payments begin and end.

If Prairie Loom refuses to pay and argues the exaction is unconstitutional, what is the strongest response under the governing doctrine?

Explanation. Under the majority's reasoning, a processor forced to pay an exaction that is inseparable from a statutory program may challenge the exaction itself. The Court distinguished ordinary taxpayer suits attacking federal expenditures from suits by persons required to pay money as part of an allegedly unauthorized plan. Because the levy, appropriation, and payments operate together to induce local production limits, the processor may resist collection.