Judges occasionally declare federal laws unconstitutional. But usually when a law passed by Congress has been on the books for more than 150 years, it’s in the clear. Not so for the federal ban on homemade whiskey, vodka and gin.
Last week, an appeals court invalidated a federal law dating to 1868 that criminalizes at-home distilleries. The spirited ruling is a boon to small-time liquor hobbyists and entrepreneurs — but also an important statement on the limits of the federal government’s taxing power.
Congress imposed the ban as a companion to legislation taxing alcohol and tobacco. The idea was that if Americans could distill spirits at home, they could more easily evade taxes.
The Treasury Department licenses distilleries. In 2023, its Alcohol and Tobacco Tax and Trade Bureau told a handful of would-be, at-home distillers that they couldn’t get a license because of the federal ban. They sued.
The federal government defended the law — which carries a punishment of up to five years in prison — as justified by Congress’s taxing power. But as the opinion for the U.S. Court of Appeals for the Fifth Circuit says, “The parties do not dispute that Congress may impose a tax on distilled spirits.” The question is whether it can ban the distillation of alcohol at home to aid the enforcement of that tax.
Nonsense, the unanimous three-judge panel held. There’s no reason the federal government can’t license at-home distilleries and tax them just as it taxes others. Perhaps those distilleries are harder to detect, but “preventing activity lest it give rise to tax evasion places no limit whatsoever on Congress’s power under the taxation clause.”
The Constitution’s necessary and proper clause gives Congress a little more leeway to achieve its objectives. But the court held it’s not enough to justify this ban. That’s because it doesn’t help raise revenue; it prevents taxable activity — the distillation of alcohol at a residence — from happening in the first place.
“Under the government’s logic,” the opinion explains, “Congress may criminalize nearly any at-home conduct only because it has the possibility of concealing taxable activity. Home-based businesses may be forbidden. Remote work may be deemed a crime.”
The federal government has sweeping taxing powers, but there are still limits on its power to command and control economic activity. This ruling is an affirmation of that principle, and the Trump administration would do the cause of liberty a favor by accepting the decision rather than trying to overturn it at the Supreme Court.
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