Is it a tax, or is it regulatory?
- 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
EDYE and Another v. ROBERTSON, Collector.; CUNARD STEAMSHIP COMPANY
v. ROBERTSON.; SAME v. SAME.
SUPREME COURT OF THE UNITED STATES
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
UNITED STATES v. BUTLER ET AL., RECEIVERS OF HOOSAC MILLS CORP.
SUPREME COURT OF THE UNITED STATES
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.