United States v. Butler, 297 U.S. 1 (1936), is a U.S. Supreme Court case that held that the U.S. Congress has not only the power to lay taxes to the level necessary to carry out its other powers enumerated in Article I of the U.S. Constitution but also a broad authority to tax and spend for the "general welfare" of the United States. The decision itself concerned whether the processing taxes instituted by the 1933 Agricultural Adjustment Act were constitutional.
Tax for impermissible regulatory purpose
The main issue of the case was whether certain provisions of the Agricultural Adjustment Act of 1933 conflicted with the U.S. Constitution. The Act imposed a tax on processors of farm products, the proceeds of which to be paid to farmers who would reduce their area under cultivation and consequently their crops yields. The Act was intended to increase the prices of certain farm products by decreasing the supply of quantities produced. This increased the cotton price paid for Hoosac Mills in North Adams, Massachusetts, who brought the case.
The U.S. Supreme Court held that the so-called tax was not a true tax <!--Though Chief Justice Hughes would join the opinion of Roberts, and let Roberts speak for the majority in his own words.