He went on to say that the good sought in unconstitutional legislation leads citizens and legislators down a dangerous path of breaching the constitution and recognized standards. Taft said, “ Scienters are associated with penalties, not with taxes.” “ court must be blind not to see that the so-called tax is imposed to stop the employment of children within the age limits prescribed.” Taft said that the court must commit itself to the highest law of the land and the duty of the court, even though it requires them to refuse legislation designed to promote the highest good. Taft argued the law describes a set course for businesses and when they deviate from that course, a payment is enacted. In addition, the Child Labor Tax Law is a regulation on businesses instead of a tax. The lower court ruled in favor of the company.Ĭhief Justice Taft's Court declared the tax on child labor was unconstitutional because it was a disguised criminal penalty, not a tax, on employment of children. In addition, the government contended that the tax was merely an excise tax levied by Congress under its broad power of taxation under Article One of the Constitution. The United States argued that, the statute, as an indirect tax, did not need to meet a standard as long as it was geographically uniform. Drexel paid the tax under protest and sued for a refund.ĭrexel's main argument was that the tax was an unconstitutional attempt to regulate manufacturing. On September 21, 1921, a collector from the Bureau of Internal Revenue (now the Internal Revenue Service) assessed $6,312.79 in excise taxes for employing a child under fourteen during the 1919 tax year. Drexel was a furniture manufacturing company in North Carolina. The law defined child labor as “under the age of sixteen in any mine or quarry, and under the age of fourteen in any mill, cannery, workshop, factory, or manufacturing establishment.” The definition also included the use of children between the ages of fourteen and sixteen who worked more than eight hours a day or more than six days a week, or who worked between the hours of 7:00 p.m. On February 24, 1919, Congress passed the Child Labor Tax Law which imposed an excise tax of 10 percent on the net profits of a company that employed children.
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