Child Labor Tax Case

Bailey v. Drexel Furniture Co., 259 U.S. 20 (1922) (a/k/a “Child Labor Tax Case”)

SummaryIn the Child Tax Labor Case, the U.S. Supreme Court ruled that a purported “tax” was really a “penalty” and therefore an unconstitutional exercise of Congress’s power to tax. While the breadth of the decision has been limited in light of subsequent interpretations of Congress’s power to regulate interstate commerce, it remains relevant when Congress passes a “tax” that’s unsupported by any other enumerated power.

Background:  Among the powers that the U.S. Constitution grants to Congress are “Power To lay and collect Taxes, Duties, Imposts and Excises”[1] (the “Taxing Power”) and “to regulate commerce . . . among the several states” (the “Interstate Commerce Clause”).[2] The Tenth Amendment to the Constitution clarifies that “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”[3]

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