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Is it a tax, or is it regulatory?

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  • Scott
    If the money (credit) collected goes to governmental functions, it s a tax. If it doesn t, it s for the purpose of regulating the supply and demand of the
    Message 1 of 1 , Nov 3, 2005
      If the money (credit) collected goes to governmental functions, it's
      a tax. If it doesn't, it's for the purpose of regulating the supply
      and demand of the money circulating in commerce. Just because it's
      called a tax, that doesn't make it one. The courts have ruled on it

      1884 U.S. LEXIS 1909,*;112 U.S. 580;
      5 S. Ct. 247;28 L. Ed. 798
      v. ROBERTSON.; SAME v. SAME.
      112 U.S. 580;5 S. Ct. 247;28 L. Ed. 798;1884 U.S. LEXIS 1909;3
      A.F.T.R. (P-H) 2473
      Argued November 19, 20, 1884.
      December 8, 1884, Decided

      The act imposes two classes of duties on the Secretary. 1st. With
      regard to convicts, &c. 2d. With regard to emigrants. The money when
      collected is to be applied to the needs of such of the second class
      as arrive in steam [*4] or sail vessels, in each case being spent
      only at the port where raised. The power for such legislation must
      be found, if at all in the grant, either of power to levy taxes,
      &c., or of power to regulate commerce. The grant of power to levy
      taxes indicates the purposes for which the money raised shall be
      used. Whether construed literally or strictly, all agree that it
      must be expended for general welfare. If the money raised is to be
      used for the benefit of a few individuals, in a limited locality,
      the act authorizing it to be raised is not within the constitutional
      grant of power to levy taxes. As to the power to regulate commerce,
      &c., the following propositions may be taken as settled. 1. Commerce
      includes navigation as well as traffic, and extends to the
      transportation of passengers equally with merchandise. Gibbons v.
      Ogden, 9 Wheat. 1; The Passenger Cases, 7 How. 283; Henderson v.
      Mayor of New York, 92 U.S. 259. 2. The power to regulate commerce
      includes a power to determine the conditions upon which it is to be
      carried on, to encourage, or even to entirely prohibit it, including
      of course every mode of "regulating" it which lies intermediate
      between those extremes. 3. [*5] The authorized regulation of
      commerce may be accomplished indirectly by the adjustment of the
      duties from which a national revenue is derived, as well as directly
      by positive enactments enforced by appropriate penalties

      But the true answer to all these objections is that the power
      exercised in this instance is not the taxing power. The burden
      imposed on the ship owner by this statute is the mere incident of
      the regulation of commerce -- of that branch of foreign commerce
      which is involved in immigration. The title of the act, "An Act to
      regulate immigration," is well chosen. It describes, as well as any
      short sentence can describe it, the real purpose and effect of the
      statute. Its provisions, from beginning to end, relate [*29] to
      the subject of immigration, and they are aptly designed to mitigate
      the evils inherent in the business of bringing foreigners to this
      country, as those evils affect both the immigrant and the people
      among whom he is suddenly brought and left to his own resources.

      It is true not much is said about protecting the ship owner.But he
      is the man who reaps the profit from the transaction, who has the
      means to protect himself and knows well how to do it, and whose
      obligations in the premises need the aid of the statute for their
      enforcement. The sum demanded of him is not, therefore, strictly
      speaking, a tax or duty within the meaning of the Constitution. The
      money thus raised, though paid into the Treasury, is appropriated in
      advance to the uses of the statute, and does not go to the general
      support of the government. It constitutes a fund raised from those
      who are engaged in the transportation of these passengers, and who
      make profit out of it, for the temporary care of the passengers whom
      they bring among us and for the protection of the citizens among
      whom they are landed.

      If this is an expedient regulation of commerce by Congress, and the
      end to be attained is one [*30] falling within that power, the act
      is not void, because, within a loose and more extended sense than
      was used in the Constitution, it is called a tax.

      1936 U.S. LEXIS 946,*;297 U.S. 1;
      56 S. Ct. 312;80 L. Ed. 477
      No. 401
      297 U.S. 1;56 S. Ct. 312;80 L. Ed. 477;1936 U.S. LEXIS 946;36-1 U.S.
      Tax Cas. (CCH) P9039;16 A.F.T.R. (P-H) 1289;1936-1 C.B. 421;4 Ohio
      Op. 401;102 A.L.R. 914
      Argued December 9, 10, 1935
      January 6, 1936

      It is inaccurate and misleading to speak of the exaction from
      processors prescribed by the challenged act as a tax, or to say that
      as a tax it is subject to no infirmity. A tax, in the general
      understanding of the term, [*100] and as used in the Constitution,
      signifies an exaction for the support of the Government. The word
      has never been thought to connote the expropriation of money from
      one group for the benefit of another.

      We conclude that the act is one regulating agricultural production;
      that the tax is a mere incident of such regulation and that the
      respondents have standing to challenge the legality of the exaction.

      It does not follow that as the act is not an exertion of the taxing
      power and the exaction not a true tax, the statute is void or the
      exaction [*101] uncollectible. For, to paraphrase what was said in
      the Head Money Cases (supra), p. 596, if this is an expedient
      regulation by Congress, of a subject within one of its granted
      powers, "and the end to be attained is one falling within that
      power, the act is not void, because, within a loose and more
      extended sense than was used in the Constitution," the exaction is
      called a tax.

      (Note by researcher): The following case is cited within the first

      In the case of Veazie Bank v. Fenno, 8 Wall. 533, 549, the enormous
      tax of eight per cent. per annum on the circulation of State banks,
      which was designed, and did have the effect, to drive all such
      circulation out of existence, was upheld because it was a means
      properly adopted by Congress to protect the currency which it had
      created, namely, the legal-tender notes and the notes of the
      national banks. It was not subject, therefore, to the rules which
      would invalidate an ordinary tax pure and simple.

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