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What You Should Know About the Commerce Clause?

The Commerce Clause: An Overview

The Commerce Clause is a provision in the U.S. Constitution that grants Congress the power to regulate commerce between foreign nations, and among the several states, and with Indian tribes. This clause is found in Article I, Section 8 of the Constitution. The Commerce Clause has been the subject of much debate and controversy, particularly in recent years, regarding the extent of Congress’s power to regulate various types of economic activity.

History and Scope of the Commerce Clause

The Commerce Clause was included in the U.S. Constitution as a response to the economic chaos that resulted from states erecting trade barriers and imposing tariffs on each other during the Articles of Confederation. The framers of the Constitution recognized the importance of a unified approach to commerce for the success of the nation’s economy.

Over time, the scope of the Commerce Clause has been broadly interpreted by Congress and the Supreme Court. In the landmark case of Gibbons v. Ogden (1824), the Supreme Court interpreted the Commerce Clause to include not only the regulation of goods and products but also the regulation of economic activities that impact interstate commerce. This interpretation has been followed by the Court in subsequent cases.

The Commerce Clause in Action

The Commerce Clause has provided Congress with the power to regulate a wide range of activities, including labor standards, environmental laws, and civil rights laws.

For example, in the case of United States v. Lopez (1995), the Supreme Court struck down a federal law that banned guns within 1,000 feet of a school, arguing that it was not a valid exercise of Congress’s power under the Commerce Clause.

However, in the subsequent case of United States v. Morrison (2000), the Court upheld the Violence Against Women Act of 1994, which allowed victims of gender-motivated violence to sue their attackers in federal court. The Court ruled that Congress has the power to regulate activities that have a substantial effect on interstate commerce, and that gender-motivated violence significantly impacts the national economy.

Commerce Clause Challenges

Despite its broad interpretation by the Court, the Commerce Clause has faced challenges in recent years, particularly from those who argue that Congress has overstepped its bounds in regulating certain types of economic activity.

For example, in the case of National Federation of Independent Business v. Sebelius (2012), the Supreme Court narrowly upheld the Affordable Care Act, including the individual mandate provision that required citizens to purchase health insurance or pay a penalty. The Court ruled that while the individual mandate could not be upheld under the Commerce Clause, it was a valid exercise of Congress’s power to tax.

Conclusion

In conclusion, the Commerce Clause is an essential provision in the U.S. Constitution that grants Congress the power to regulate commerce between foreign nations, and among the several states, and with Indian tribes. The clause has been broadly interpreted by Congress and the Supreme Court, allowing for the regulation of a wide range of economic activity. However, its scope has also been challenged in recent years, with some arguing that Congress has overstepped its bounds in regulating certain types of economic activity.


Background: 

The Commerce Clause allows congress to have control over commerce within each state, with a foreign state and among Indian Tribes. However, Congress does grant each state the ability to make certain rulings on taxation of commerce. For example, a state may make determinations about the taxation of manufacturing within that state, but not other issues of commerce.  The state is entitled to do so as long as the tax is free of prejudice and not does not discourage business.

In essence, a state may not impose taxes that are detrimental to the nation. In fact, no state, or member of congress, may make allowances for taxation, or other issues of commerce, that could hurt the country. The power granted to congress in the Commerce Clause has consistently been upheld by the courts. However, the Clause, and issues of taxation stemming form it, are continuously challenged in court. The Commerce Clause can be applied to any issue of commerce, but has been utilized frequently to make determinations about issues of taxation of commerce, including the conditionality of certain taxes imposed by each state.

Congressional Power: 

According to the Commerce Clause, Congress has the authority to make determinations about all issues of commerce. Those issues of commerce may pertain to any state, Indian Tribe, or foreign trade. Congress was granted that authority in order to prevent state governments from abusing their ability to tax commerce within a state. Congressional power has often been called upon in order to decide certain issues of commerce, even commerce that strictly takes place within one state.

Although the ability for congress to make determinations about intrastate commerce has been challenged, that right has been upheld. Intrastate commerce can effect the Nation in the same way that interstate commerce can, and therefore those determinations are allowed by the Commerce Clause. No act of commerce is permitted to be detrimental to the nation or to be based on discrimination. For example, a state may not impose higher taxes on gun manufacturers simply because a state’s politics suggest that citizens are inherently opposed to guns. The state does have the right to tax that commerce, but not in an excessive, or discriminatory manner.

Role of the Federal Court System: 

The Federal Court system hears cases that challenge issues of commerce, including challenges to the Commerce Clause. There have been cases that challenged the Commerce Clause on issues where states have imposed taxes on commerce. For example, cases like Complete Auto Transit v. Brady, allowed the Federal Courts to make determinations about a states control over taxing a company that conducts business in more than one state, and is headquartered in only one state.

The Company challenged the states authority to impose such a tax but the courts ruled the the tax was allowed by the Constitution. Mississippi was legally allowed to impose a tax on a company, for granting that company the privilege of being able to conduct business in Mississippi. The taxes were valid because that company enjoyed benefits in the state that were funded through taxation and therefore, the company should be required to shoulder some of the burden of taxation. Any disputes about issues of commerce, including taxation, are heard by the federal courts because of congressional authority over commerce.

“Dormant” Commerce Clause: 

The Dormant commerce clause grants each state the ability to control certain issues that relate to commerce, such as manufacturing. Congress may not interfere in state taxation issues, unless they are in violation of the commerce clause, or other constitutional principles.

The Dormant Commerce clause grants each state the ability to impose taxes in cases where a company conducts business in a state, or is headquartered in a state. While congress has the authority over commerce issues, even when the business is intrastate, states do have limited power over such matters. However, due process allows any individual or entity to challenge those determinations. Cases that make challenges to the Commerce Clause, are often heard in Federal court.

Complete Auto Transit v. Brady: 

Mississippi imposed a tax on Complete Auto Transit after they began to transport vehicles through the state. In addition to transporting vehicles through the state, they also delivered vehicles to businesses in the state. Mississippi declared that Complete Auto Transit owed a state tax based on the company enjoying the benefit of conducting business in the state.

The company challenged Mississippi in court, declaring that the tax was a violation of the Commerce Clause, which did not allow for taxation on interstate commerce if it would discourage business, or if it was discriminatory. Taxes based on discrimination, such as a business being based in another state, were thought to be in violation of the Commerce Clause. However, the court’s decision reaffirmed each states ability to impose certain commerce taxes, as long as the taxes were not detrimental to the Nation. Taxes that were considered detrimental to the nation, were those that prohibited companies from conducting business, or those that discouraged business in certain jurisdictions.