Steward Mach. Co. v. Davis

301 U.S. 548, 57 S. Ct. 883 (1937)



In certain circumstances, credits are allowable under Section 902 of the Social Security Act of 1935. If the taxpayer has made contributions to an unemployment fund under a state law, he may credit such contributions against the federal tax, provided, however, that the total credit allowed to any taxpayer shall not exceed 90 per centum of the tax against which it is credited, and provided also that the state law shall have been certified to the Secretary of the Treasury by the Social Security Board as satisfying certain minimum criteria.


Petitioner, an Alabama corporation, paid a tax in accordance with the statute, filed a claim for refund with the Commissioner of Internal Revenue, and sued to recover the payment ($ 46.14), asserting a conflict between the statute and the Constitution of the United States. Petitioner further asserted that exceptions to the statute violated U.S. Const. amend. V. However, the states were not bound to keep their unemployment laws in force, nor were monies paid into federal fund to be kept there indefinitely or for any stated period of time. The Secretary of the Treasury had to honor a requisition for any or all deposit in the fund when request was made by appropriate officials. The United States Supreme Court affirmed the dismissal of the complaint.


Was there a violation of the Fifth Amendment on the basis of the federal unemployment tax system?




The tax imposed by Title IX of the Social Security Act of August 14, 1935, upon the employer of labor, described as "an excise tax with respect to having individuals in his employ," and which is measured by prescribed percentages of the total wages payable by the employer during the calendar year, is either an "excise," a "duty," or an "impost," within the intent of Art. I, Sec. 8, of the Constitution, and complies with the requirement of uniformity throughout the United States. Thus, the judgment dismissing petitioner's complaint challenging the constitutionality of the Social Security Act of 1935 and requesting recovery of taxes paid was affirmed. 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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