Constitutional Law I, Pages 228–230

Bailey v. Drexel Furniture Co.

Supreme Court of the United States, 1922


Congress passed the Child Labor Tax Law, which imposed a 10% tax on the net profits of every employer of a child under 14 and certain employers of children between 14–16. Drexel paid the tax then sued for a refund.

Procedural History:

District court found for Drexel.


Was the Child Labor Tax Law constitutional under Congress' taxing power?


A constitutional tax must have the object of of raising revenue, not just police power purposes.


The Child Labor Tax Law was not enacted to raise revenue. This is merely a pretext to usurp the states' reserved police powers. That it was "calculated to effect" police powers is evidenced by how it was enforced. It was a large tax, which would discourage companies from keeping their child labor and paying the tax. The tax was based on the taxpayers' conduct, which is unusual for a tax. It was not only enforced by the Treasury, but it also authorized inspections to be done by the Department of Labor, which is usually not involved in taxes. Finally, the tax requires a mens rea, which is really not typical for taxes. These factors indicate that it was intended as a penalty under the police powers.


No, the Child Labor Tax Law was unconstitutional as it was a penalty. Affirmed.