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Law School Case Brief

Steward Mach. Co. v. Davis - 301 U.S. 548, 57 S. Ct. 883 (1937)


Every employer (with stated exceptions) is to pay for each calendar year an excise tax, with respect to having individuals in his employ, the tax to be measured by prescribed percentages of the total wages payable by the employer during the calendar year with respect to such employment. Section 901 of the Social Security Act of 1935. One is not, however, an employer within the meaning of the act unless he employs eight persons or more. Section 907 of the Social Security Act of 1935. There are also other limitations of minor importance. The term employment has its special definition, excluding agricultural labor, domestic service in a private home and some other smaller classes. Section 907(c). The tax begins with the year 1936, and is payable for the first time on January 31, 1937. During the calendar year 1936 the rate is to be one per cent, during 1937 two per cent, and three per cent thereafter. The proceeds, when collected, go into the Treasury of the United States like internal revenue collections generally. Section 905(a) of the Social Security Act of 1935.


Petitioner filed a claim for refund from the Commission of Internal Revenue of a tax paid in accordance with the Social Security Act of 1935. The district court dismissed the complaint. The dismissal was affirmed on appeal. Petitioner challenged the constitutionality of the Social Security Act of 1935, claiming that the tax was neither an excise nor uniform. Petitioner contended that the purpose of the tax was not revenue but an unlawful invasion of reserved powers of states and that states had yielded to coercion.


Is the Social Security Act of 1935 constitutional?




Where the Social Security Act of 1935 was not found to be in conflict with the U.S. Constitution, judgment for the collector of Internal Revenue was affirmed, and the employer did not recover the payment of unemployment taxes. The Supreme Court of the United States held that the statute levied an appropriate excise tax with valid exceptions uniformly across the states, and the terms of the statute did not invade the reserved powers of the states.

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