Saturday, December 7, 2013

Child Labor Tax Case (Bailey v. Drexel Furniture Co.) case brief

Child Labor Tax Case (Bailey v. Drexel Furniture Co.) case brief summary
259 U.S. 20 (1922)


CASE SYNOPSIS
Defendant United States appealed from a District Court of the United States for the Western District of North Carolina decision that ordered defendant to refund the amount of taxes plaintiff manufacturer paid under the Child Labor Tax Law, 40 Stat. 1057, 1138 (1919).

CASE FACTS
Plaintiff incurred tax liability under the Child Labor Tax Law (Law), 40 Stat. 1057, 1138 (1919), by permitting a child to work in its factory. After paying the tax bill under protest, plaintiff brought suit challenging the constitutionality of the Law and sought a tax refund. Defendant appealed from the lower court's entry of judgment in favor of plaintiff.

DISCUSSION
  • The Court on appeal affirmed, holding that the Law was an impermissible attempt to regulate employment of child labor, an exclusive state function reserved under U.S. Constitutional Amendment X. 
  • The Court held that the Law was not an allowable federal government excise tax but rather a penalty enacted to coerce state citizens to act in accordance with Congress' views on child labor. 
  • The Law was not naturally and reasonably adapted to collection of a tax but an impermissible attempt to achieve a purpose solely within state power.

CONCLUSION
The decision of the lower court was affirmed on appeal. The Child Labor Tax Law was an impermissible attempt by Congress to interfere with regulation of child labor, an exclusive state function, through imposition of a penalty and was not an allowable excise tax.

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