THE SUPREME COURT'S ADJUDICATION OF CONSTITUTIONAL ISSUES IN 1921-1922, III

Authors

Abstract

The conundrum, "When is a tax not a tax?" received in Bailey v. Drexel Furniture Co. the answer: When from the face of the statute it appears that a prohibitory or regulatory penalty has been imposed for a departure from a detailed and specified course of conduct in business. Over the dissent of Mr. Justice Clarke, the court condemned as not an exercise of the federal taxing power a provision in the Revenue Act of 1918 imposing an excise of ten per cent of the net profits on all enterprises employing children under designated ages or in excess of designated periods per day and per week. Other features of the statute thought to be regulatory rather than fiscal in character were those allowing inspection of manufacturing establishments by the secretary of labor and his subordinates and excusing from the tax those who had employed children having an age certificate from federal officials or children whom the employer did not know to be under age. "Scienters," said Chief Justice Taft, "are associated with penalties, not with taxes."

Recommended Citation

THE SUPREME COURT'S ADJUDICATION OF CONSTITUTIONAL ISSUES IN 1921-1922, III, 21 Mich. L. Rev. 290 (1923).
Available at: https://repository.law.umich.edu/mlr/vol21/iss3/4