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Congress passed a regulatory tax, Child Labor Tax Act, on products created by child labor. Drexel employed child labor in North Carolina. Congress is exceeding its taxing power when it imposes a tax with a police power and purpose. It doesn’t matter if the taxes also generate revenue. Attempting to regulate local behavior, such as the employment of children under certain conditions, through a tax is an impermissible use of police power usually delegated to the individual states. The Court affirms that not all revenue-generating measures passed by Congress are immediately valid under the taxing and spending clause. Any regulation under the guise of a tax is an improper use of the taxing power and will be held unconstitutional. This intent of the Act is to regulate child labor, not a genuine tax.
Bailey v. Drexel Furniture Co., commonly known as the Child Labor Tax Case, was a United States Supreme Court case decided in 1922. The case revolved around the constitutionality of the Keating-Owen Child Labor Act of 1916, which aimed to regulate child labor. The Act prohibited the shipment in interstate commerce of goods produced in factories employing children under a certain age.
In this case, Drexel Furniture Company challenged the constitutionality of the Act, arguing that it exceeded the federal government’s power under the Commerce Clause and violated the Tenth Amendment by encroaching on powers reserved to the states.
The Supreme Court, in a 5-4 decision, sided with Drexel Furniture Co. and held that the tax imposed by the Act was, in fact, a penalty rather than a true tax. The Court found that the Act attempted to regulate and control labor conditions, which was beyond the scope of the federal government’s authority. The decision emphasized the importance of maintaining a clear distinction between the federal government’s power to regulate interstate commerce and the states’ power to regulate local economic and social conditions.
This ruling marked a limitation on the federal government’s ability to regulate certain aspects of labor and industry under the Commerce Clause. However, it’s essential to note that subsequent developments, including changes in the composition of the Supreme Court and societal attitudes towards child labor, led to a shift in legal interpretations. Ultimately, the Child Labor Tax Case was effectively overruled by later decisions, and Congress gained broader authority to regulate labor conditions under the Commerce Clause.
Congress may not attempt to regulate through a tax a matter that is reserved to the states by the Tenth Amendment to the Constitution.
In 1919, Congress passed the Child Labor Tax Law which constituted a ten percent tax on the profits of any company using child labor. The law defined “child labor” as the use of minors “under the age of sixteen in any mine or quarry, and under the age of fourteen in any mill, cannery, workshop, factory, or manufacturing establishment.” Additionally, the definition applied to the use of children in these age ranges for more than eight hours a day or six days a week, or during certain evening hours. Drexel challenged the law on the ground that it was an unconstitutional attempt by the federal government to regulate child labor in the states–a function exclusively reserved to the states under the Tenth Amendment to the Constitution.
While most laws passed by Congress are entitled to significant deference by the Court, the current law should not be provided this deference because it clearly imposes federal restrictions on a power reserved to the states, in this case, the regulation of child labor. The Child Labor Tax is not actually a “tax,” as the sole purpose for taxes is to generate revenue for the government. Congress’ actual motive behind this tax is to impose monetary penalties upon businesses employing children for the purpose of regulating child labor use among the states.Similarly, in McCray v. United States, 195 U.S. 27 (1904), the Court upheld a tax on yellow margarine versus white margarine that was motivated by a desire to promote the sale of white margarine. Finally, in United States v. Doremus, 249 U.S. 86 (1919), the Court upheld a tax on the manufacture, importation, and sale or gift of opium that was motivated by the goal of discouraging drug use. While each of these taxes was motivated by a regulatory goal apart from raising revenue, the difference between them and the Child Labor Tax Law was that each was applied to a subject area squarely within the ability of Congress to regulate. In contrast, the Child Labor Tax Law represents an effort by Congress to regulate a subject area clearly reserved to the states by the Constitution. Thus, Congress overstepped its regulatory bounds and the Child Labor Tax Law is unconstitutional.
Bailey vs. Drexel Furniture Company (1922)
Facts: The Tax on Employment of Child Labor under Title XII of the Revenue Act places a ten percent tax on the net profits of individuals who utilize the labor of children under the age of 16. Those who refuse inspection may be punished by fine and imprisonment. In 1921, the Drexel Furniture Company learned that a ten percent tax was incurred for the taxable year 1919 for employing young boys under fourteen. The company paid the tax but requested a refund. After their request was rejected, the company brought forth the suit.
Significance: The Bailey v. Drexel Furniture Co case concluded that the Child Labor Tax Law, which imposed a tax on goods produced using child labor, was unconstitutional because it exceeded Congress’s powers under the Commerce Clause. The Court concluded that the law is unconstitutional, stating that labeling a penalty as a tax cannot override the constitutional limitations on Congress’s powers and undermine state sovereignty.
Bailey v Drexel Furniture Co.
259 US 20 (1922)
Facts: Congress enacted the Revenue Act of 1919, aka the Child Labor Tax Law. This law taxed 10% of annual profits of companies employing kids under the age of 14. Drexel company was required to pay over 6000 dollars in taxes.
Question: was the act unconstitutional? Did congress overstep their authority to pass the act?
Opinion: yes
Reasoning: due to the tax exerting a “prohibitory and regulatory effect” it was unconstitutional
Facts of the Case: Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922)
Congress passed the Child Labor Tax Law of 1919 (the Law). The law imposed a federal excise tax of 10% on the annual net profits of those employers who used child labor in certain businesses. The statute created a standard, limiting the employment of children in certain industries. If an employer knowingly failed to comply with the standard, then the tax would be imposed. Drexel Furniture Company, which paid $6000 under this statute, brought a suit challenging its constitutionality.
Issue: Did Congress violate the Constitution in adopting the Child Labor Tax Law in attempting to regulate the employment of children, a power reserved to the states under the Tenth Amendment?
Ruling: Yes. In an 8-1 ruling, the Court found that the Child Labor Tax Law was in violation of the Constitution as it intruded on the jurisdiction of states to adopt and enforce child labor codes
Reasoning: Congress is not validly exercising its taxing power when it imposes a tax with a prohibitory and regulatory effect and purpose. It is irrelevant that the taxes are also generating revenue. Attempting to regulate local behavior, such as the employment of children under certain conditions, through a tax is an impermissible use of power. Not all revenue-generating measures passed by Congress are valid taxes. A regulation under the guise of a tax is an improper use of the taxing power and will be held invalid.
Dissenting Opinion: Justice Clarke Dissented.
Name and Citation: Bailey v Drexel Furniture co. 259 U.S. 20
Facts: In 1919, Congress passed the Child Labor Tax, which enacted a federal excise tax of 10 percent on the profits of businesses who employed people under the age of 16. Drexel furniture was discovered to be doing so and reluctantly paid the tax. They then sued the government to regain the money lost under the guise that this was not an exercise of Congress to raise revenue for the general welfare of the public but rather to stop the practice of child labor.
Question: Was the Child Labor Tax an unconstitutional attempt by congress to use taxing power to regulate activity reserved to the states?
Opinion: Yes.
Reasoning: the court literally stated “Court would have to be blind to not see that the purpose of this tax is to regulate the employment of children” it was not an attempt to regulate commerce, as is the congressional power.
Facts: in 1919 congress passed the Child Labor tax act. The act prohibited the employment of persons under the age of sixteen in mines and quarries, and under the age of 14 in mills, factories, and other manufacturing establishments. The act also had other regulations that aren’t as important for this case. The most important one is that employers hiring children were subject to a 10% tax on their revenue.
Question: Whether the child labor act is an unconstitutional use of the taxing power to regulate an activity reserved to the states?
Ruling: the act is unconstitutional
reasoning: “The court would have to be blind not to see that the purpose of this tax is to regulate the employment of children” the act was an attempt for congress to regulate child labor in the name of their authority to tax
acts
Congress passed child labor tax law that imposed 10% tax on the net profits of a company that employed children
Drexel payed the tax but sued for refund
Drexel argues that the tax attempted to regulate manufacturing
The government argued that it was a excise tax that was constitutional under article 1
Question
Is the tax on child labor constitutional?
Decision
The tax is unconstitutional
This tax as a regulation on business instead of a act
The tax was a disguised criminal penalty
Bailey v. Drexel Furniture Co.
259 U.S. 20 (1922)
Facts of the Case: The Child Labor Tax Law was enacted in 1919 and it imposed an excise tax of 10% of net profits on companies who employed children. Children were considered to be 16 and under working in mines or quarries, 14 and under working in a mill, cannery, workshop, factory, etc. Drexel Furniture employed 14 year olds, so they were meant to pay $6k in taxes, but they filed a suit claiming the government was regulating local businesses rather than interstate commerce.
Legal Question: Did Congress exceed their power to enact the Child Labor Tax Law to regulate employing children?
Holding: 8-1 in favor of Drexel
Court’s Opinion: Yes, the court believed the Child Labor Tax Law was an overstep, and they feared for state sovereignty if they were to uphold the law. They believe it is up to the states to enforce child labor codes and Congress has no jurisdiction here.
Case Name:
Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922)
Facts:
The case of Bailey v. Drexel Furniture Co., also known as the “Child Labor Tax Case,” involved the Drexel Furniture Company, which was assessed a tax under the Child Labor Tax Law of 1919. This federal law imposed a 10% tax on the net profits of companies that employed children under the age of 14 in mines and quarries and under the age of 16 in mills, canneries, workshops, factories, and manufacturing establishments. The Drexel Furniture Company, located in North Carolina, was found to have employed a child under the age of 14 and was therefore assessed a tax of $6,312.79.
The company paid the tax under protest and sued to recover it, arguing that the tax was not a true tax but a penalty for employing children in violation of the law. The company contended that this was an unconstitutional attempt by Congress to regulate child labor in the states, a power reserved to the states by the Tenth Amendment.
Issue:
The central issue in the case was whether the Child Labor Tax Law was a legitimate exercise of the taxing power of Congress under the Constitution or an unconstitutional attempt to regulate child labor, which was a power reserved to the states.
Holding:
The Supreme Court held that the Child Labor Tax Law was not a true tax, but a penalty to coerce states into regulating child labor according to federal standards. The Court ruled that the law was an unconstitutional invasion of states’ rights.
Reasoning:
The Court, in an opinion written by Chief Justice William Howard Taft, reasoned that the tax was a penalty because it was imposed to enforce the regulation of child labor, not to raise revenue. The Court distinguished between taxes and penalties, stating that a tax is a source of revenue, while a penalty is a punishment for an unlawful It found that the Child Labor Tax Law was intended to penalize employers for using child labor, rather than to raise revenue for the federal government. This intention was evident from the prohibitive rate of the tax, the fact that the tax applied only to companies that allowed certain practices, and the regulatory nature of the provisions for inspection and enforcement.
Conclusion:
The Supreme Court concluded that the Child Labor Tax Law overstepped the bounds of federal power and infringed upon the rights of the states. The law was therefore unconstitutional, and the Drexel Furniture Company was entitled to a refund of the tax it had paid.
Significance:
The decision in Bailey v. Drexel Furniture Co. was significant because it demonstrated the limits of Congress’s power to use its taxing authority to regulate behavior. The ruling maintained the distinction between taxation and penalty, reinforcing the principle of federalism and the constitutional boundaries between state and federal powers. The case also highlighted the ongoing struggle to balance economic interests with social reform efforts, such as the regulation of child labor, during the early 20th century.
This case was yet another instance in which the court ruled that Congress was exceeding its powers. In this case, the court decided against the Child Labor tax law which imposed a federal tax of 10% on the yearly profits of any business that employed children younger than 14 years old. The court found that the act served a regulatory effect which Congress did not have the power to enact in relation to taxing.
In 1919, Congress passed the “Child Labor Tax Law,” which put a 10% Excise Tax on companies that employed children, which was defined as anyone under the age of 16 in a quarry/mine or a 14 year old in a mill, factory, or other manufacturing plant. Additionally: if someone between the ages of 14 and 16 works more than 8 hours a day, 6 days a week, or works at some point between 7 PM and 6 AM. Drexel Furniture Co. was in violation of this law, and paid $6,312.79 in taxes (over $108K in today’s cash) under protest. They later sued Bailey – the local IRS Collector – for Congress using taxes to regulate a market that it wasn’t able to following the Dagenhart decision.
In an 8-1 ruling, the Supreme Court agreed with Bailey’s argument. The tax was a front for regulating a business practice that the Commerce Clause was unable to touch. The Opinion compared paying this tax to paying a fine attached to a guilty verdict. Furthermore, if this tax were to go through, Congress would use it to regulate more things that violate the Commerce Clause, allowing it to affect Intrastate Commerce directly. Obviously any similar case in the future should come to similar findings and there is absolutely no way any future Court would permit Intrastate Commerce to be regulated by either taxes or the C.C. Nope. Not at all.
Mis-type: Drexel’s argument.
Bailey vs Drexel Furniture
citation: 259 U.S. 20 (1922)
facts: The Child Labor Tax Law of 1919 imposed an excise tax (tax imposed at time of entry into the United States, or sale or use after importation on a per unit basis) on the profits of companies that employed children. Drexel, a furniture manufacturing company, employed children under 14 so it had to pay. Drexel then sued for a refund, arguing that the act was an unconstitutional attempt to regulate local manufacturing, not intrastate commerce.
Q: Was the 1919 Child Labor Tax Law an unconstitutional overstep of congressional power?
A:Yes
Reasoning: With the way it was imposed, the Act functioned less as a tax and more as a criminal punishment for companies who used child labor.Thus, it violated the spirit of the 10th amendment.
etc: In my opinion, this act by congress wades into the judicial policy sphere, which I think is why the court shut it down. Prohibition and regulation are often coupled with judicial interpretation of situations where defining legality is up to the judge.
How did the Bailey v. Drexel Furniture Co. case relate to the broader constitutional and economic issues of its time?
I. Bailey v. Drexel Furniture Co
II. 259 US 20
III. Facts: On February 24, 1919, Congress passed the Child Labor Tax Law which imposed an excise tax of 10 percent on the net profits of a company that employed children. The law defined child labor as “under the age of sixteen in any mine or quarry, and under the age of fourteen in any mill, cannery, workshop, factory, or manufacturing establishment.” Drexel Furniture Co. was found in violation of it and required to pay over $6000 in taxes.
IV. Issue: Did Congress violate the Constitution in adopting the Child Labor Tax Law in attempting to regulate the employment of children, a power reserved to the states under the Tenth Amendment?
V. Decision and Action: Yes
VI. Reasoning: The Child Labor Tax Law was in violation of the Constitution since the jurisdiction of states to adopt and enforce labor codes.
VII. Concurring Opinion: N/A
VIII. Dissenting Opinion: Justice McKEnna, VAnn DEvanter, and McReynolds have left.
IX. Voting Coalition: 8-1 for Drexel
X. Summary: The Court indicated that the tax imposed by the statute was actually a penalty in disguise.
Bailey v. Drexel Furniture, 259 U.S. 20 (1922): Congress enacted the Revenue Act of 1919, also known as the Child Labor Tax, which imposed a ten percent tax on companies that employed children under the age of fourteen. As a result, Drexel Furniture Company was responsible for paying over $6000 in taxes because it had violated the law. The issue in question was whether Congress had acted beyond the scope of its powers by passing a law that prohibited the employment of children, which is a constitutional power reserved by the states under the Tenth Amendment. The Supreme Court struck down the Child Labor Tax Law by ruling that the congressional act violated the Constitution because it intruded on the reserved powers of the states. Therefore, Congress had no jurisdiction over child employment.
Bailey v. Drexel Furniture Co. (259 U.S. 20 (1922)). In 1919, Congress passed the lRevenue Act of 1919 aka the Child Labor Tax Law, which essentially taxed any company using child labor ten percent of their annual earnings. Drexel Furniture Company was found to have violated the Child Labor Tax Law and was fined over $6000 in taxes. The company actually did pay the fine, but the act was still called into question of being constitutional or not. The question become wether or not the act overstepped in the powers reserved to the states under the tenth amendment. The court found that it did indeed violate the tenth amendment and was unconstitutional.
I. Name or Title of Case:
Bailey v. Drexel Furniture Co. (1922)
II. Legal Citation:
259 U.S. 20 (1922)
III. Statement of Facts:
The Child Labor Tax Act was passed and enacted by Congress in 1919, in which it prohibited the employment of children under sixteen years of age from working in mines and quarries. In addition, it forbade employment of children under fourteen years of age from working in mills, factories, or other types of manufacturing institutions. This act also placed time restrictions on the hours and times minors could work in these establishments. Due to this Act, if employers were found violating its regulations, they were subject to a 10 percent tax on their net profits for that tax year. Drexel Furniture Company was employing a boy under the age of 14, thus, Bailey who was an internal revenue collecter iniated a tax of $6312.79 for violating the Child Labor Tax Act.
IV. Statement of Issues:
Whether or not Congress had the authority to enforced the Child Labor Act under the Commerce Clause.
V. Decision and Action:
The Court ruled in favor of the Drexel Furniture Company, holding that the Child Labor Tax Act was unconstitutional and could not be enforced.
VI. Reasoning of the Court:
The Court, delivered by Justice Taft, provided that the Child Labor Tax Act was ouside of the scope of Congress’s power, and this regulation is reserved by the State’s. Therefore, due to the taxes clear intentions of attempting to regulated child labor, it is not just a broad excise of congressional taxing authority.
VII. Concurring Opinion(s):
None.
VIII. Dissenting Opinion(s):
Justice Clarke dissented, arguing that this was within congressional authority under the power to levy taxes. In addition, he believed that it restricted congressional authority in potential interstate commerce implications of child labor.
IX. Voting Coalition:
The Court ruled in favor of Drexel Furniture with a vote of 8 to 1.
X. Summary:
This case reaffirmed the assertion that Congress cannot regulate manufacturing, due to this power being reserved to the States, thus Congress cannot attempt to regulate manufacturing through the taxing and spending clause because it does not fall under their constitutional powers.
Summary:
Congress passed the Revenue Act of 1919, which taxed companies that have employer under the age of 14. This was a 10% revenue. The Drexel Furniture company agrued that the Act was unconstitutional. The court did side with the furniture company deeming that Congress would be taking too much power away from the states.
I. Bailey v. Drexel Furniture Co. 1922
II. 259 US 20 (1922)
III. Facts: Under its taxing powers, Congress passed the Revenue Act of 1919, known as the Child Labor Tax Law. This law imposed a ten percent tax on the profits of companies employing children under fourteen years old. In the same year, Drexel Furniture Company was found to have violated the law and was obligated to pay over $6000 in taxes. The company paid the amount under protest.
IV. Issues:
1. Did Congress violate the Constitution in adopting the Child Labor Tax Law in attempting to regulate the employment of children, a power reserved to the states under the Tenth Amendment?
V. Decision and Action
1.Yes
VI. Reasoning Per Taft
He argued that the tax law in question exceeded its scope, exerting a prohibitory and regulatory effect beyond Congress’s jurisdiction. He cautioned that upholding this law would undermine state sovereignty and erode constitutional limitations on congressional powers by allowing regulatory measures to be disguised as taxes.
VII. Concurrence None
VIII. Dissents: Per Clarke
“The court said that the act could not be declared invalid just because another motive than taxation, not shown on the face of the act, might have contributed to its passage.”
IX. Coalitions: 8-1
X. Summary: The law imposes a tax on employers who violate regulations regarding the employment of children in mines, quarries, mills, and factories. However, the Supreme Court finds that the law goes beyond being a tax and functions as a penalty aimed at regulating and prohibiting certain employment practices. They argue that such regulation falls within the exclusive authority of the states, as reserved by the Tenth Amendment. The Court concludes that the law is unconstitutional, stating that labeling a penalty as a tax cannot override the constitutional limitations on Congress’s powers and undermine state sovereignty.
I. Bailey v. Drexel Furniture Co.
II. 259 U.S. 20 (1922)
III. In 1919 Revenue Act was passed, which was also Child Labor tax law. This tax was taxing companies that were employing children under age of 14 by 10%. Drexel Furniture Co. was charged for fine, but it sued that Congress overstepped its powers.
IV. Was the Child Labor tax unconstitutional?
V. Yes
VI. Court argued that this was a state police power, and was not for Congress to impose the law on this issue.
VII. Concurring: None
VIII. Dissenting: Justice Clarke
IX. 8 to 1
X. We can see one of the exceptions on courts’ rulings, because it limited powers of Congress.
I. Title: Bailey v Drexel Furniture Co (1922)
II. 259 US 20 (1922)
III. Facts: In 1919, Congress passed the Child Labor Tax Law, also known as the Keating-Owen Act, which imposed a tax on goods produced using child labor. The Drexel Furniture Company was charged with violating this act and failing to pay the required tax. The company argued that the act was unconstitutional because it exceeded Congress’s powers under the Commerce Clause and violated the Fifth Amendment’s due process rights.
IV. Issues: The main issues in this case were whether the Child Labor Tax Law exceeded Congress’s powers under the Commerce Clause and whether it violated the Fifth Amendment’s due process rights.
V. Decisions and Action: The United States Supreme Court held that the Child Labor Tax Law was unconstitutional because it exceeded Congress’s powers under the Commerce Clause. The Court ruled that the act was an attempt to regulate and control manufacturing, which is a power reserved to the states. As a result, the Court declared the law void and ruled in favor of Drexel Furniture Company.
VI. Rationale: The Court determined that the Child Labor Tax Law was not a legitimate exercise of Congress’s power under the Commerce Clause. The Court reasoned that the act was not a tax but rather a regulatory measure disguised as a tax. It was deemed an unconstitutional attempt by Congress to regulate and control manufacturing, which falls under the reserved powers of the states.
VII. Concurring Opinion: There were no concurring opinions in this case.
VIII. Dissenting Opinion: Justice Stone dissented, arguing that the Child Labor Tax Law was a valid exercise of Congress’s power to levy taxes. He believed that the majority’s decision unnecessarily restricted Congress’s authority and did not properly consider the economic impact of child labor on interstate commerce.
IX. Voting Coalition: The majority opinion was supported by Chief Justice Taft and Justices Holmes, Van Devanter, McReynolds, Brandeis, Clarke, and Butler. Justice Stone dissented.
X. Summary and Legal Principle: The Bailey v Drexel Furniture Co case concluded that the Child Labor Tax Law, which imposed a tax on goods produced using child labor, was unconstitutional because it exceeded Congress’s powers under the Commerce Clause. The Court determined that the act was an attempt to regulate manufacturing, a power reserved to the states, and not a legitimate exercise of Congress’s taxation authority. This case established the principle that Congress cannot use its taxing power as a means to regulate or control activities beyond its constitutional authority.
In Bailey v. Drexel Furniture Company, the question before the Court was whether or not the Child Labor Tax Law was unconstitutional. The Child Labor Tax Law imposed a ten percent tax on companies who employed children under the age of fourteen in their company. Drexel Furniture Company was found in violation of this law. The Supreme Court ruled that the Child Labor Tax Law was unconstitutional and further explained that Congress had overstepped its power and as a result was trying to take away states’ power.
Bailey v. Drexel Furniture
259 U.S. 20(1992)
Facts:
The Tax on Employment of Child Labor under Title XII of the Revenue Act places a ten percent tax on the net profits of individuals who utilize the labor of children under the age of sixteen to operate a mine, quarry, mill, cannery, workshop, or factory. Those who refuse inspection may be punished by fine and imprisonment. In 1921, the Drexel Furniture Company received notice from Bailey, a collector of Internal Revenue for the District, that a ten percent tax was incurred for the taxable year 1919 for employing young boys under fourteen. The company paid the tax but requested a refund. After their request was rejected, the company brought forth the suit.
Issues:
Is the Child Labor Tax an excess of congressional power?
Decision & Action:
The Supreme Court held that congress cannot take the state’s police power.
Reasoning of the Court
A congressional act designed to penalize cannot be sustained under the federal taxing power because the states reserve the right to regulate intrastate commerce. The tax provides a heavy exaction and employers that violate regulations under the tax have to pay the government one tenth of their income. Taxes may aim to both collect revenue or penalize. The Child Labor Tax coerces the state to act in accordance with congress’ wishes in matters that fall under the state’s authority, intrastate commerce. In Veazie Bank v Fenno, the court asserted that the tax in question was excessive and aimed on the part of congress to destroy the franchise of the bank which is beyond congress’ constitutional power. The tax is excessive.
Concurring Opinions: None
Dissenting Opinions: Justice Clarke
Voting Coalition: 8 to 1
Summary:
The States regulate the employment of child labor not congress. The tax is too excessive to be maintained.
“U.S. Supreme Court Center.” Justia Law, supreme.justia.com/. Accessed 5 June 2023.
I. Bailey v. Drexel Furniture Co.
II. 259 U.S. 20 (1922)
III. Congress passed the Revenue Act of 1919, which taxed companies that employed children under the age of 14 at 10% annual revenue. Drexel Furniture Co. had to pay over 6000 dollars in taxes.
IV. Was the regulatory tax in the Revenue Act constitutional?
V. No.
VI. The court decided that the tax on child labor in the Revenue Act of 1919 was unconstitutional because it was an attempt to take police power away from the states. This opinion goes against the broad interpretation of Congress’s power to tax in previous cases such as United States v. Doremus, which was only decided upon three years earlier.
VII. No concurring opinions.
VIII. Justice Clarke dissented.
IX. The decision was 8-1 in favor of Drexel Furniture Co.
X. This case went against many of the powers Congress had been given in earlier cases. The court drew a distinction between policing and regulating, stating that taxes cannot change the behavior of businesses.
Congress imposed child labor taxes which the USSC deemed to be beyond Congress’ ability because this was a regulation of business rather than a tax. It undermines State sovereignty and Congress’ intended duties. Taft stated that a tax is for government use while a penalty is to discourage certain behavior which is beyond the power of Congress.
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=video&cd=&cad=rja&uact=8&ved=2ahUKEwiTnomevZn4AhXXPs0KHVh7BX8QtwJ6BAgLEAI&url=https%3A%2F%2Fcase-law.vlex.com%2Fvid%2F259-u-s-20-606350482&usg=AOvVaw1mvcPuPL7RPa-sIMG3V_6P
This is one of the cases where Congress was not allowed to freely pass taxes on something they wish. The court found that the power to regulate child labor laws like creating a tax on the employer was in the hands of the states. It is unfortunate to learn that Congress was trying to tax and gain money from child labor, instead of trying to fight against child labor.
Drexel seems to be a sudden turnaround from Doremus and McCray, which causes me to think about whether the Court was simply sympathetic to big businesses using child labor (again) or whether they wanted Congress to be more specific in their taxing. After all, the tax in Drexel was fairly broad.
Man, the Court really loves their child labor. This one hit home for me because I own Drexel furniture (passed down from my grandmother and refinished). I can’t tell if this is a function of who’s on the Court, or the broader American mentality at the time (that there’s nothing wrong with it, that it’s economically expedient, etc). Either way, cases like this make me worried about the trustworthiness of the Court as an institution.
There is simply no reason to say taxing child labor to disincentivize it is unconstitutional but taxing dyed margarine to disincentivize it is constitutional. This is complete ideological incohrence. The only reason the Court ruled differently here is because they support child labor, while they didn’t support the margarine industry. They’re not interpreting the law consistently and fairly, it all depends on who is currently standing before them, and what a sad state of affairs that is.
Congress was not allowed to fine companies employing under 14 year old children in this case. The court found that this should be up to states. Taft in this case seems to talk about congress not being allowed to tax things in order to prevent or try and limit them; child labor in this example. I think this just shows work to actually try and stop child labor from being harder to obtain by the court as it was a part of the economy sadly.
Facts: Congress enacted the Revenue Act of 1919. (Child Labor Tax law) This law forced companies employing children would be asses 10% of their annual profits. When this law was passed, Drexal furniture corp. was found in violation and required to pay over $6,000 in taxes. (which they did under protest)
Constitutional question: Did congress violate the constitution in passing the Child Labor Tax law in attempting to regulate employment of children, which was a power reserved for the states under the 10th amendment?
Holding: 8-1; court found the Child Labor Tax law unconstitutional
Reasoning: Court found that it violated on the jurisdiction of the states to adopt and enforce labor codes.
I. Bailey v. Drexel Furniture Company
II. 259 U.S. 20 (1922)
III. Facts: Congress passed the Revenue Act of 1919, which mandated that companies employing children under the age of fourteen be assessed ten percent of their annual profits. Drexel Furniture Company was in violation of this Act and required to pay over 6000 dollars in taxes.
IV: Issues:
(1) Did Congress violate the Constitution by attempting to regulate the employment of children with the Revenue Act of 1919?
V: Decision and Action:
(1) Yes.
VI: Reasoning:
(1) The Revenue Act of 1919 disguised criminal penalties as taxes. Allowing Congress to do this would infringe upon powers reserved to the States by the Tenth Amendment of the United States Constitution.
VII. Concurrence(s): N/A.
VIII: Dissent(s): N/A.
IX: Voting Coalitions: (8 to 1). For the majority, Taft, Brandeis, Day, Holmes, McKenna, McReynolds, Pitney, and Van Devanter. For the minority, Clarke.
X: Summary: Bailey v. Drexel Furniture Company made a clear distinction between penalization and taxation. It affirmed that Congress could not use their taxing power to regulate the behavior of corporations.
XI: Free Space:
Sebastian MoscosoJun 7, 2021
In this case I still cant believe the court sided with the furniture company. I think that if a piece of legislation that would benefit child labor should be approved. The whole concept of children working long hard hours in companies and not having them getting recompensed accordingly is appalling. Just the fact that many young kids had to go through this and have the court not help them is something else.
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Amy Siddiqui
Amy SiddiquiJun 7, 2021
The Court sides with the furniture company in that they view the Child Labor Tax Law to be more than just a tax. There was a quote that stuck out to me – “If he (the employer) does not know the child is within the named age limit, he is not to pay.” I mean that just sounded ridiculous. To me, if a person seems underage and the employer is questioning whether or not the person is underage, then it’s the employer’s duty to ask the person for their age. This just seemed like a giant loophole and something that places the burden on the employees, the kids. It reminded me of the labor situations in many developing countries, where we get much of our products made. Although many of those countries outlawed child labor, child labor is a huge problem.
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Alex Nguyen
Alex NguyenJun 7, 2021
In this case congress enacted the Revenue act of 1919 which was a Tax on Child Laborer, but the court ruled this act unconstitutional as the power to regulate the employment of children, was reserved to the states under the Tenth Amendment.
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Jarod Rhymes
Jarod RhymesJun 6, 2021
Congress’ Child Labor Tax law enacted in 1919 allowed them to exercise a 10 percent tax of a company’s NET profit if they employed children under 14. Drexel of course stated that the tax was unconstitutional and I have to agree. Lower court ruled in favor of the company and the Supreme Court found the tax to be unconstitutional.
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Jeff Gemini
Jeff GeminiJun 6, 2021
I am a little confused to why this tax wasn’t allowed because others were but they simply claimed they didn’t have jurisdiction in this regard yet they deemed years earlier that they did. The Justices feared that Congress would try and rule through taxation forcing people to do thing or be taxed otherwise.
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Cassidy McLernon
Cassidy McLernonJun 6, 2021
Congress enacted the Revenue Act of 1919, also called the Child Labor Tax Law. This law makes it so that companies employing children under fourteen years old would be assessed ten percent of their annual profits. Drexel Furniture Company was found in violation of it and was required to pay over $6000 in taxes. The Supreme Court found that Act was in violation of the Constitution. The tax law exerted a “prohibitory and regulatory effect” in a realm over which Congress had no jurisdiction.
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Jacqueline Lopez
Jacqueline LopezJun 6, 2021
Even though this case was ruled upon 3 years after U.S v Doremus (1919) and 18 years after McCray v U.S (1904) where in both of those cases the U.S Supreme Court upheld regulatory taxes, this case was rejected. The other two cases were used to regulate the sale of colored oleomargarine or opium and cocoa leaves and were upheld as constitutional. However, the regulating child labor with a tax was deemed unconstitutional. This is poor judgement on behalf of the justices.
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Itsawong Pongreangrong
Itsawong PongreangrongJun 5, 2021
This case is a prove of Congress violates 10th amendment. This is allowed big companies continue to use child’s labor force, which is under 14. Therefore, it does not protect the kids but rich companies. Congress benefits from tax while child rights is violated.
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Jamie Musso
Jamie MussoJun 9, 2020
This case deemed the 1919 child labor tax law as unconstitutional. This law taxed companies that employed children. Drexel sued claiming that the tax was an excise tax from congress. The lower courts ruled with Drexel, but Justice Taft did rule that tax on child labor is unconstitutional because it is a criminal penalty in disguise and is a regulation on businesses and not exactly a tax.
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Augustas Tamavicius
Augustas TamaviciusJun 5, 2020
In this case, the Supreme Court sided against the federal government, and ruled that the Child Labor Tax Law of 1919 unconstitutional. The Supreme Court argued that taxes levied against businesses utilizing child labor were unconstitutional because the “tax” was a penalty under the guise of a tax.
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Amy Gordon
Amy GordonJun 5, 2020
In this case, the court struck down the ability of Congress to tax employers who used child labor as it was clear that by taxing child labor, they were imposing a penalty on its use.
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Sarita Cavazos
Sarita CavazosJun 5, 2020
the court struck down this second attempt by congress to regulate and limit child labor
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Kiera Gnatz
Kiera GnatzJun 5, 2020
The Court found that the Child Labor Tax Law was in violation of the Constitution violated the 10th amendment, which inherently delegated the power to regulate child labor laws to the States. There is not perceived rational relationship between child labor and interstate commerce in this case, so the Court had to strike it down (regardless of its good intentions)
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Brianna Moling
Brianna MolingJun 5, 2020
The Court ruled that the Child Labor Tax Law violated the Constitution. Adopting and enforcing child labor laws is a power reserved to the states under the Tenth Amendment, and therefore Congress does not have jurisdiction.
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Crystal Quevedo
Crystal QuevedoJun 5, 2020
The Revenue Act of 1919 imposed a tax on employers using child labor. Wow, the ct rules the act is an intrusion on states rights, and child labor continues unpenalized for well over another decade in the U.S.
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Krystal Garcia Centeno
Krystal Garcia CentenoJun 5, 2020
In Bailey v. Drexel Furniture Co, the Court ruled the 1919 Child Labor Tax Law unconstitutional and an improper attempt by Congress to penalize employers using child labor.
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Mara Ortiz
Mara OrtizJun 4, 2020
Seems about right that congress would fumble the ball on something as important as child labor. Congress implemented a 10% tax on businesses that employed children under 14 through the Child Labor Tax Law. When Drexel Furniture Co. violated it, the courts ruled in their favour determining that the act unconstitutional as it violated the 10th amendment. This was a win for states rights, but in my opinion a loss for human rights.
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Jared Cuthbertson
Jared CuthbertsonJun 4, 2020
In contrast with the last few cases, this case explicitly limits congress’s ability to freely pass excise taxes in a manner to limit their regulatory control. The court found that the power to regulate child labor laws fell in the hands of the states.
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Johanna Fernandez
Johanna FernandezJun 4, 2020
In trying to do something good, Congress did not really win this one since it would be overstepping their legislative powers. It was a step in trying to take down child labor but the Act was ruled unconstitutional.
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Johnathon Giesecke
Johnathon GieseckeJun 4, 2020
Congress tried to actually pass quality legislation by fining companies that employ children under the age of 14. However, the court rules this violated the10th amendment making the act unconstutional.
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Matt Springer
Matt SpringerJun 4, 2020
In Bailey v. Drexel Furniture Co., Congress enacted the Child Labor Tax Law which fines companies that employees children 14 years of age or under be assessed 10% of their profits. Drexel violated the law. The Question was “Did Congress violate the Tenth Amendment by attempting to regulation the hiring of children?” Sadly, The Court sided against Congress
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April Quevedo
April QuevedoJun 4, 2020
This case made me think of all the other weird/harmful things Congress is not able to regulate because it is not explicitly delegated to them (age of consent, incestuous marriages, etc). There are definitely some issues the national government should have power over rather than the 50 individual states.
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Martin Tully
Martin TullyJun 4, 2020
The 10th Amendment should be removed from the Constitution or amended because a single law that extends throughout the US is easier to follow than fifty state laws that are all different.
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Cheyenne Henry
Cheyenne HenryJun 4, 2020
Taft feared that upholding this law would destroy state sovereignty and devastate “all constitutional limitation of the powers of Congress” by allowing it to disguise future regulatory legislation in the cloak of taxes.
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Justyna Kucharczyk
Justyna KucharczykJun 4, 2020
The Court found that the Child Labor Tax Law violated the Constitution. Justice Taft argued that Congress had no jurisdiction or power to regulate in that area.
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Christopher Mathew
Christopher MathewJun 4, 2020
This case provided a check on the regulatory powers of Congress regarding state sovereignty. It could not pass regulations that impeded the 10th Amendment, which provides for state rights.
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Tess Manke
Tess MankeJun 4, 2020
The Revenue Act/Child Labor Tax Law was enacted by Congress in 1919 which entailed that any company employing children under 14 years of age would be taxed 10% of their annual profits. Bailey, the Collector of Internal Revenue for North Carolina, brought suit against Drexel Furniture Co. because they were in violation of the act and needed to pay their taxes. Question: Was the Child Labor Tax Law unconstitutional because that power was reserved to the states? YES. The Court ruled that it impeded state jurisdiction to adopt/enforce child labor codes.
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Matthew Breslin
Matthew BreslinJun 12, 2019
Bailey v. Drexel was one of the few cases in the early 20th Century that applied some limits to Congress’s capacity to regulate commerce. For whatever reason, it seems like “states rights” victories are often at the expense of being on the right side of history.
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Blanca Henkle
Blanca HenkleJun 9, 2019
The Child Labor Act was ruled unconstitutional. The Supreme Court held that Congress power to tax was not valid to regulate domestic behavior, that power is a reserved power of the states.
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Jacob Mattenson
Jacob MattensonJun 8, 2019
The Court here ruled that Congress does not have the authority to lay taxes upon Drexel Furniture Co., as it was seen as a possible precursor to Congress extending its authority over issues that are relegated to the States as per the 10th Amendment.
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Deleted user
Deleted userJun 7, 2019
Congress does not uphold their taxing power or expand it like in the other cases.
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Deleted user
Deleted userJun 17, 2018
Issue. May Congress impose a tax as a penalty for failure to comply with regulatory standards?No. Congress is not validly exercising its taxing power when it imposes a tax with a prohibitory and regulatory effect and purpose.
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Deleted user
Deleted userJun 16, 2018
Congress has no jurisdiction over the regulation of Child labor standards and laws which is reserved to the individual states under the 10th amendment. The act attempted to create a path to allow Congress to regulate, and is thus unconstitutional.
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Deleted user
Deleted userJun 15, 2018
Can Congress impose a tax on industries as a means of regulating child labor, under the pretext of the taxing power?
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Deleted user
Deleted userJun 14, 2018
This was a large victory for state’s rights in stopping Congress from using its taxing power to force states to follow Congress’s authority.
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Deleted user
Deleted userJun 11, 2018
The significance of this of this case is that it ruled the child labor tax law of 1919 as unconstitutional under the taxing clause
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Deleted user
Deleted userJun 10, 2018
Question: May Congress impose a tax as a penalty for failure to comply with regulatory standards?
Holding: No
Reasoning: Congress is not validly exercising its taxing power when it imposes a tax with a prohibitory and regulatory effect and purpose. It is irrelevant that the taxes are also generating revenue. Attempting to regulate local behavior, such as the employment of children under certain conditions, through a tax is an impermissible use of power.
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Deleted user
Deleted userJun 9, 2018
The Court found that the Child Labor Tax Law was in violation of the Constitution as it intruded on the jurisdiction of states to adopt and enforce child labor codes. Chief Justice Taft argued that the tax law in question did much more than simply impose an “incidental restraint” but exerted a “prohibitory and regulatory effect” in a realm over which Congress had no jurisdiction. Taft feared that upholding this law would destroy state sovereignty and devastate “all constitutional limitation of the powers of Congress” by allowing it to disguise future regulatory legislation in the cloak of taxes.
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Deleted user
Deleted userJun 8, 2018
While possibly a loss for many child workers, I think the Court’s decision to strike down the Child Labor Tax Law was a necessary check on Congress.
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Jung Kim
Jung KimJun 7, 2018
Congress imposed child labor taxes which the USSC deemed to be beyond Congress’ ability because this was a regulation of business rather than a tax. It undermines State sovereignty and Congress’ intended duties. Taft stated that a tax is for government use while a penalty is to discourage certain behavior which is beyond the power of Congress.
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Deleted user
Deleted userJun 6, 2018
Was the Child Labor Tax Law made in order to limit child labor, or was it just used as an opportunity for the government to obtain more tax revenue ?
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Deleted user
Deleted user
Personally, I think that it has a lot to do with Congress taking another opportunity to collect taxes. I think that this basically being a penalty, as the Court stated, means Congress knew it would be broken and that they would be able to profit off of it.
Jun 8, 2018•Delete
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Kevin Lyles
Deleted user
Deleted userNov 15, 2017
Was the Child Labor Tax Law a violation of the 10th amendment? Yeah, the USSC found it did violate the tenth amendment. (The Child Labor Taz gave congress the right to tax 10% to companies that hired children under 14).
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Deleted user
Deleted userNov 14, 2017
What I find most interesting about the case, is that Taft, the only president to also serve as a supreme court justice, decided that he did not want to extend the power of congress by diminishing the power of the states and therefore invalided the power of congress to regulate child labor laws. Taft, understanding the implications of this expansion of the commerce clause, ruled against its expansion.
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Deleted user
Deleted userNov 12, 2017
The court refrains from doing what it considered the greater good in allowing Congress to penalize child labor and chooses to allow constitutional rights to supersede.
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Deleted user
Deleted userNov 12, 2017
This case ruled that the Child Labor Tax Law of 1919 is unconstitutional since it sought to punish businesses who employed children rather than just tax for revenue.
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Kevin Lyles
Kevin LylesDec 5, 2016
Hi Steven,
Great question. I think I mentioned this quickly in class but here is my view.
Steven, I understand that you see “contrasting outcomes.” In Doremus, [$1.00 per year tax, Harrison Narcotic Drug Act] the Court expands the taxing power (as you wrote in your email). The Act is upheld. The Doremus Court finds: “The fact that other motives may impel the exercise of Federal taxing power does not authorize the courts to inquire into the subject. If the legislation enacted has some reasonable relation to the exercise of the taxing authority conferred by the Constitution, it cannot be invalidated because of the supposed motives which induced it.”
However, Bailey concerns the 1919 Congress Child Labor Tax Act. The Court is “in a bind” because they support[ed] the states’ right to exploit child labor. Go back to Hammer v. Dagenhart (which is 1918), just one year prior to Doremus. Hammer is not overruled until 1941 in Darby. Bailey does NOT overrule Doremus.
I understand the confusion. Perhaps the “contrasting outcome” is more about a pro-business Taft Court refusing to prohibit child labor than it is about interpreting the commerce or taxing and spending powers of Congress. In short, the Court ruled that the child labor law in Bailey, could not be distinguished from Hammer. The common thread is CHILD LABOR.
In my personal view I think the Taft Court is saying “We support the exploitation of child labor and we will find a way to preserve it (lyles).”
Read these three pages, pp. 127 to 129 in The Taft Court: Justices, Rulings, and Legacy, by Peter G. Renstro.
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Deleted user
Deleted userNov 7, 2016
Opinion: Justice Taft delivers the majority opinion and explains that the 1919 child labor tax is unconstitutional. The act sought to punish the business sector through taxation for employing children in the production process as opposed to it being just a regular tax for revenue. The Supreme Court would later abandon this philosophy.
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Deleted user
Deleted userNov 6, 2016
5) Did Congress violate the Constitution by adopting the Child Labor Tax Law in attempt to regulate the employment of children?
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Demitri Kladis
Demitri KladisNov 6, 2016
1) Facts: In 1919, Congress passed the the Child Labor Tax Law, which imposed a federal excise tax of 10% on annual profits to businesses that employed people of the age of 16 and under. If anyone in a company knowingly employed someone under the appropriate age, the tax would automatically kick in. Drexel Furniture Company was found in violation of the law and was asked to pay the tax, which they did under protest. Drexel believed Congress was using an unconstitutional attempt to regulate manufacturing, while Congress believed it was just an excise tax that it was allowed to issue under its taxation abilities in Article I.
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