Bailey v. Drexel Furniture Co
Bailey v. Drexel Furniture Co. is a significant Supreme Court case decided in 1922 that dealt with the legality of a tax imposed by Congress on companies employing child labor. This tax was introduced as a response to the earlier ruling in Hammer v. Dagenhart, which had invalidated federal child labor laws. The Supreme Court, in an 8-1 decision, struck down the tax, emphasizing that it acted more as a regulatory measure aimed at abolishing child labor rather than simply taxing businesses. Chief Justice William H. Taft articulated concerns that such a tax could undermine state sovereignty by granting Congress excessive power over local matters. Critics of the ruling argue that this distinction between taxes and regulation is problematic. Although the decision held for several years, it was later challenged and effectively overturned in subsequent cases, reflecting an evolving perspective on federal authority in regulating labor practices. This case illustrates the tension between federal and state powers and the ongoing debate regarding child labor laws in the United States.
Bailey v. Drexel Furniture Co.
Date: May 15, 1922
Citation: 259 U.S. 20
Issues: Regulation of manufacturing; dual federalism
Significance: The Supreme Court ruled that Con- gress could not use its taxing power to impose regulations on production, which were powers reserved to the states by the Tenth Amendment.
In Hammer v. Dagenhart (1918), the Supreme Court struck down the first federal child labor statute as an unconstitutional use of the commerce power. In response, Congress enacted the Keating-Owen Child Labor Act of 1919, which imposed a 10 percent tax on the net profits of companies employing children under the age of fourteen. Supporters of the law noted that the Court had approved of a prohibitive excise tax on oleomargarine in McCray v. United States (1904).
In Bailey, the justices voted eight to one to strike down the law. Chief Justice William H. Taft’s opinion for the majority declared that the “so-called” tax was really a disguised regulation designed to stop child labor. To allow taxes to be used for such purposes, he declared, would give Congress almost unlimited powers and “completely wipe out the sovereignty of the states.” In McCray, the Court had approved of a tax that provided only “incidental restraint and regulation,” but the child labor tax, in contrast, had a “prohibitory and regulatory effect.” Modern commentators usually find that Taft’s distinction lacks merit. Although the Bailey decision remained good law for two decades, the Court rejected its theoretical foundations in Mulford v. Smith (1939).