In Butler v. United States, the Supreme Court considered the constitutionality of the Agricultural Adjustment Act of 1933. The Act was passed by Congress in order to provide economic relief to farmers during the Great Depression. The Act imposed a tax on processors of certain agricultural products, and the proceeds of the tax were used to pay subsidies to farmers who agreed to reduce their production. The Court held that the Act was constitutional. The Court reasoned that Congress had the power to tax and spend for the general welfare of the nation, and that the Act was a valid exercise of that power. The Court also held that the Act did not violate the Fifth Amendment's Takings Clause, as the subsidies were voluntary and the tax was imposed on processors, not farmers. The Court's decision in Butler v. United States established the principle that Congress has broad authority to tax and spend for the general welfare of the nation. This principle has been cited in numerous subsequent Supreme Court decisions.

Justice Field delivered the dissenting opinion in Butler v. United States, arguing that Congress had exceeded its authority under the Constitution when it passed a law taxing income from certain kinds of property. He argued that this was an unconstitutional exercise of power because it violated the Tenth Amendment, which reserves to states all powers not delegated to the federal government by the Constitution. Furthermore, he argued that taxation is a state prerogative and should remain so; if Congress were allowed to tax incomes from property then they would be able to control how much money people have available for investment and other economic activities. This could lead to an imbalance between states with high taxes and those with low taxes, resulting in unfair competition among them. Finally, Justice Field noted that such taxation would also interfere with contracts made between individuals or corporations since any profits derived from these agreements could be subject to taxation by both state and federal governments at different rates depending on where they are located.