Source: https://openjurist.org/345/us/22
Timestamp: 2019-04-23 20:05:01+00:00

Document:
Argued Dec. 16, 17, 1952.
Rehearing Denied April 6, 1953.
The issue raised by this appeal is the constitutionality of the occupational tax provisions of the Revenue Act of 1951,1 which levy a tax on persons engaged in the business of accepting wagers, and require such persons to register with the Collector of Internal Revenue. The unconstitutionality of the tax is asserted on two grounds. First, it is said that Congress, under the pretense of exercising its power to tax has attempted to penalize illegal intrastate gambling through the regulatory features of the Act, 26 U.S.C. (Supp. V) § 3291, 26 U.S.C.A. § 3291, and has thus infringed the police power which is reserved to the states. Secondly, it is urged that the registration provisions of the tax violate the privilege against self-incrimination and are arbitrary and vague, contrary to the guarantees of the Fifth Amendment.
The case comes here on appeal, in accordance with 18 U.S.C. § 3731, 18 U.S.C.A. § 3731, from the United States District Court for the Eastern District of Pennsylvania, where an information was field against appellee alleging that he was in the business of accepting wagers and that he willfully failed to register for and pay the occupational tax in question. Appellee moved to dismiss on the ground that the sections upon which the information was based were unconstitutional. The District Court sustained the motion on the authority of our opinion in United States v. Constantine, 296 U.S. 287, 56 S.Ct. 223, 80 L.Ed. 233. The court reasoned that while 'the subject matter of this legislation so far as revenue purposes is concerned is within the scope of Federal authorities', the tax was unconstitutional in that the information called for by the registration provisions was 'peculiarly applicable to the applicant from the standpoint of law enforcement and vice control', and therefore the whole of the legislation was an infringement by the Federal Government on the police power reserved to the states by the Tenth Amendment. United States v. Kahriger, D.C., 105 F.Supp. 322, 323.
The result below is at odds with the position of the seven other district courts which have considered the matter,2 and, in our opinion, is erroneous.
Appellee would have us say that because there is legislative history3 indicating a congressional motive to suppress wagering, this tax is not a proper exercise of such taxing power. In the License Cases, supra, it was admitted that the federal license 'discouraged' the activities. The intent to curtail and hinder, as well as tax, was also manifest in the following cases, and in each of them the tax was upheld: Veazie Bank v. Fenno, 8 Wall. 533, 19 L.Ed. 482 (tax on paper money issued by state banks); McCray v. United States, 195 U.S. 27, 59, 24 S.Ct. 769, 777, 49 L.Ed. 78 (tax on colored oleomargarine; United States v. Doremus, 249 U.S. 86, 39 S.Ct. 214, 63 L.Ed. 493 and Nigro v. United States, 276 U.S. 332, 48 S.Ct. 388, 72 L.Ed. 600 (tax on narcotics); Sonzinsky v. United States, 300 U.S. 506, 57 S.Ct. 554, 81 L.Ed. 772 (tax on firearms); United States v. Sanchez, 340 U.S. 42, 71 S.Ct. 108, 95 L.Ed. 47 (tax on marihuana).
It is axiomatic that the power of Congress to tax is extensive and sometimes falls with crushing effect on businesses deemed unessential or inimical to the public welfare, or where, as in dealings with narcotics, the collection of the tax also is difficult. As is well known, the constitutional restraints on taxing are few. 'Congress cannot tax exports, and it must impose direct taxes by the rule of apportionment and indirect taxes by the rule of uniformity.' License Tax Cases, supra, 5 Wall. 471.5 The remedy for excessive taxation is in the hands of Congress, not the courts. Veazie Bank v. Fenno, 8 Wall. 533, 548, 19 L.Ed. 482. Speaking of the creation of the Bank of the United States, as an instrument for carrying out federal fiscal policies, this Court said in McCulloch v. Maryland, 4 Wheat, 316, 423, 4 L.Ed. 579.
Penalty provisions in tax statutes added for breach of a regulation concerning activities in themselves subject only to state regulation have caused this Court to declare the enactments invalid.10 Unless there are provisions, extraneous to any tax need, courts are without authority to limit the exercise of the taxing power.11 All the provisions of this excise are adapted to the collection of a valid tax.
Nor do we find the registration requirements of the wagering tax offensive. All that is required is the filing of names, addresses, and places of business. This is quite general in tax returns.12 Such data are directly and intimately related to the collection of the tax and are 'obviously supportable as in aid of a revenue purpose.' Sonzinsky v. United States, 300 U.S. 506, at page 513, 57 S.Ct. 554, at page 555. The registration provisions make the tax simpler to collect.
Finally, we consider respondent's contention that the order of dismissal was correct because a conviction under the sections in question would violate the Due Process Clause because the classification is arbitrary and the statutory definitions are vague.14 The applicable definitions are 26 U.S.C. (Supp. V) § 3285(b), (d) and (e), 26 U.S.C.A. § 3285(b, d, e).15 The arbitrariness is said to arise from discrimination because some wagering activities are excluded. The Constitution does not require that a tax statute cover all phases of a taxed or licensed business.16 Respondent predicates vagueness of the statute upon the use, in defining the subject of the tax, of the description 'engaged in the business' of wagering and 'usually' in § 3285(b) (2). We have no doubt the definitions make clear the activities covered and excluded.
What is relevant to judgment here is that, even if the history of this legislation as it went through Congress did not give one the libretto to the song, the context of the circumstances which brought forth this enactment—sensationally exploited disclosures regarding gambling in big cities and small, the relation of this gambling to corrupt politics, the impatient public response to these disclosures, the feeling of ineptitude or paralysis on the part of local law-enforcing agencies—emphatically supports what was revealed on the floor of Congress, namely, that what was formally a means of raising revenue for the Federal Government was essentially an effort to check if not to stamp out professional gambling.
The Fifth Amendment declares that no person 'shall be compelled in any criminal case to be a witness against himself'. The Court nevertheless here sustains an Act which requires a man to register and confess that he is engaged in the business of gambling. I think this confession can provide a basis to convict him of a federal crime for having gambled before registration without paying a federal tax. 26 U.S.C. (Supp. V) §§ 3285, 3290, 3291, 3294, 26 U.S.C.A. §§ 3285, 3290, 3291, 3294. Whether or not the Act has this effect, I am sure that it creates a squeezing device contrived to put a man in federal prison if he refuses to confess himself into a state prison as a violator of state gambling laws.* The coercion of confessions is a common but justly criticized practice of many countries that do not have or live up to a Bill of Rights. But we have a Bill of Rights that condemns coerced confessions, however refined or legalistic may be the technique of extortion. I would hold that this Act violates the Fifth Amendment. See my dissent in Feldman v. United States, 322 U.S. 487, 494—503, 64 S.Ct. 1082, 1085—1089, 88 L.Ed. 1408.
Cf. State of New York v. United States, 326 U.S. 572, 582, 587—588, 66 S.Ct. 310, 314, 316—317, 90 L.Ed. 326.
26 U.S.C. § 2011 et seq., 26 U.S.C.A. § 2011 et seq., require registration by tobacco manufacturers, dealers and peddlers of the 'name, or style, place of residence, trade, or business, and the place where such trade or business is to be carried on.' 26 U.S.C. § 2810, 26 U.S.C.A. § 2810, requires the possessor of distilling apparatus to register 'the particular place where such still or distilling apparatus is set up * * * the owner thereof, his place of residence * * *.' See also 26 U.S.C. § 3270, 26 U.S.C.A. § 3270.

References: § 3291
 § 3291
 § 3731
 § 3731
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 § 3285
 § 3285
 § 3285
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 § 2011
 § 2011
 § 2810
 § 2810
 § 3270
 § 3270