To manage the economic recession, under the Agricultural Adjustment of Act of 1933, the United States imposed tax upon farmers of the Hoosac Mills Corp, who refused to pay.
The power to confer or withhold unlimited benefits by Congress is the power to coerce or destroy, which is deemed unconstitutional.
In the Agricultural Adjustment Act of 1933 Congress stated that an economic emergency has arisen causing a great reduction in the farmers’ purchasing power and thereby obstructing the flow of commerce. The Act sought to reduce the supply of farm products to raise the farmers’ purchasing power. The Secretary of Agriculture under the Act had the authority to make agreements with individual farmers for reduction of acreage or production in return for rental or benefit payments. To obtain revenue for extraordinary expenses incurred by the economic recession, the Act levied a processing tax on the first domestic processing of the commodity.
Can Congress impose tax upon farmers to manage the national economic recession?
No, Congress has no power to enforce its command on the farmer to the ends – fight off the economic recession – sought by the Agricultural Adjustment Act. Congress may not indirectly accomplish those ends by taxing and spending to purchase compliance. The Constitution and the entire plan of our government does not authorize such use of power to tax and to spend as the act undertakes to authorize.
The limitation not sanctioned will lead to an absurd consequences. The government may give seeds to farmers but may not condition the gift upon their being planted in places where they are most needed. The government may give money to the unemployed, but may not ask that those who get it shall give labor in return. All such powers, because they are regulations infringing state powers, must be left for the states, who are unwilling or unable to supply the necessary relief.
Any power, not expressly granted or reasonably to be implied from such as are conferred, are reserved to the states or to the people. To hold otherwise, the Tenth Amendment was adopted. The powers not granted are prohibited. No power to regulate agricultural production is given. The Government claims that the taxing power may be employed to raise the money necessary to purchase a compliance which the Congress is powerless to command because the end is accomplished by voluntary cooperation. However, the regulation is not in fact voluntary. The farmer may refuse to comply, but the price of such refusal is the loss of benefits. The amount offered is intended to be sufficient to exert pressure on him to agree to the Act. The power to confer or withhold unlimited benefits is the power to coerce or destroy. Thus, the legislation in question is forbidden.