Court Opinion

ID: 9636310
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:23:45.376408+00
Date Added: 2024-06-11T12:09:26.328898
License: Public Domain

WILSON, Circuit Judge.
This is an appeal from a decree of the District Court of Massachusetts denying an injunction against the defendants and dismissing the plaintiff’s bill.
The original bill attacked the constitutionality of both chapter 531, 49 Stat 620, known as the Social Security Act (42 U. S.C.A. § 301 et seq.), and chapter 151A of the Massachusetts General Laws (see chapter 479 of the Acts and Resolves of 1935 [section 5]); but, after intervention by the Commissioner and Collector of Internal Revenue and the filing of answers and a motion to strike by the intervening defendants, it was stipulated by all the parties that: “the only issue involved in the case, either directly or indirectly, is whether title IX of chapter 531, 49 Stat. 620 [section 901 et seq. (42 U.S.C.A. § 1101 et seq.)], approved Aug. 14, 1935, is an Act of Congress within its powers under the Constitution of the United States, or in .violation of the Fifth Amendment thereof ; and the only way in which that issue is raised is with respect to the payments under that title IX.”
A stockholder in a corporation directly affected may properly invoke the jurisdiction of the federal courts to determine the constitutionality of the act. Carter v. Carter Coal Co., 298 U.S. 238, 56 S.Ct. 855, 80 L.Ed. 160; United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914.
The Social Security Act contains eleven titles, each having separate objects in view, viz.: I. Old Age Assistance (section 1 et seq. [42 U.S.C.A. § 301 et seq.]) ; II. Old Age Benefits (section 201 et seq. [42 U.S.C.A. § 401 et seq.]) ; III. Unemployment Compensation (section 301 et seq. [42 U.S.C.A. § 501 et seq.]); IV. Aid to Dependent Children (section 401 et seq. [42 U.S.C.A. § 601 et seq.]); V. Maternal and Child Welfare (section 501 qt seq. [42 U.S.C.A. § 701 et seq.]); VI. Public Health Work (section 601 et seq. [42 U.S.C.A. § 801 et seq.]); VII. The Creation of a Social Security Board (section 701 et seq. [42 U.S.C.A. § 901 et seq.]) ; VIII. Taxes with respect to Employment (section 801 et seq. [42 U.S.C.A. § 1001 et seq.]); IX. Taxes for Benefit of Unemployment (section 901 et seq. [42 U.S.C.A. § 1101 et seq.]); X. Grants to State in Aid of the Blind (section 1001 et seq. [42 U.S.C.A. § 1201 et seq.]) ; XI. General Provisions relating to Definitions, Rules and Separability of the Provisions of the Act (section 1101 et seq. [42 U.S.C.A. § 1301 et seq.]). On its face the entire act was passed to provide financial aid for the unfortunate, the dependent, and those incapacitated by age, or who for any reason are, temporarily, at least, unable to obtain gainful employment. ,
Title IX imposes a tax on employers of eight or more, except an employer of agricultural labor, domestic servants,, or where the service is performed as an officer or member of a vessel on the navigable waters of the United States; or performed by an individual in the employ of son, daughter, or spouse; or by a child under 21 years of age in the employ of his father or mother; or performed in the employ of the United States, or of an instrumentality of the United States; or performed in the employ of a state or a political subdivision thereof, or of o.ne or more! states; or services performed in behalf of any charitable organization, or any corporation, no part of the net earnings of which inures to the benefit of any private shareholder or individual.
Apart from these exceptions, the salient features of title IX are contained in the following provisions found in the footnote.1
*371The appellant assigned as error that the District Court erred in holding that title IX is a valid act of Congress within its powers under the Constitution of the United States.
Counsel for the appellant contends as grounds for holding that title IX is unauthorized under the powers granted to Congress in the Federal Constitution the following: (1) That it is capricious and arbitrary in its exemptions; (2) that it is not uniform in its application; (3) that the tax imposed on employers is not what it is stated to be in the act, namely, an excise tax, and is not imposed to provide for the general welfare of the United States; (4) that in purpose and effect it is an attempt by Congress to enter into a domain hitherto considered as reserved to the states, and to coerce the states into doing something the federal government has no power to do, viz., to provide compensation for those prevented by any circumstances resulting in unemployment from earning a livelihood; and (5) that it seeks further to regulate indirectly the relations between employee and employer.
We pass over the question of capriciousness and lack of uniformity as not being essential for the determination of the case, although a three-judge court in the middle district of Alabama, in Southern Coal & Coke Co. v. Carmichael, Attorney General (D.C.) 17 F.Supp. 225, has recently held the Alabama statute void on this ground. The important issues, we think, are whether the tax imposed in section 901 of title IX (42 U.S.C.A. § 1101) can be termed an excise tax; and whether the federal government by section 903 of title *372IX (42 U.S.C.A. § 1103) seeks indirectly to control state action in matters resting solely within the powers reserved to the states under Amendment 10 of the Constitution.
It is not a question of what powers Congress ought to have to meet certain conditions, but what powers are vested in Congress under the Constitution. In determining what they are, we must return to first principles. The care of the unfortunate and the dependent, and the relief of those unable to labor, is a burden imposed on the states and until recently has always been so considered. Congress has no power, either directly or indirectly, to invade this province of the states. Carter v. Carter Coal Co., supra, 298 U.S. 238, at page 295, 56 S.Ct. 855, 80 L.Ed. 1160; Schechter Poultry Corp. v. United States, 293 U.S. 495, 549, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947.
It is sometimes suggested that, since the states are powerless to solve the problem presented by unemployment in an emergency such as was passed through in the last four years, therefore there must be power in the federal government to meet the situation. A similar suggestion was made in the case of State of Kansas v. Colorado, 206 U.S. 46, at page 89, 27 S. Ct. 655, 664, 51 L.Ed. 956:
“All legislative power must be vested in either the state or the national government; no legislative powers belong to a state government other than those which affect solely the internal affairs of that state; consequently all powers which are national in their scope must be found vested in the Congress of the United States.
“But,” the court said, "the proposition that there are legislative powers affecting the nation as a whole which belong to, although not expressed in the grant of powers, is in direct conflict with the doctrine that this is a government of enumerated powers. That this is such a government clearly appears from the Constitution, in*373dependently of the Amendments, for otherwise there would be an instrument granting certain specified things made operative to grant other and distinct things. This natural construction of the original body of the Constitution is made absolutely certain by the 10th Amendment.” .
Again the Supreme Court very aptly said in Flint v. Stone Tracy Co., 220 U.S. 107, 151, 31 S.Ct. 342, 349, 55 L.Ed. 389, Ann.Cas.l912B, 1312:
“Although there have been from time to time intimations that there might be some tax which was not a direct tax nor included under the words ‘duties, imposts, and excises,’ such a tax for more than one hundred years of national existence has as yet remained undiscovered, notwithstanding the- stress of particular circumstances has invited thorough investigation into sources of revenue.” Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429, 557, 15 S.Ct. 673, 39 L.Ed. 759; Thomas v. United States, 192 U.S. 363, 370, 24 S.Ct. 305, 48 L.Ed. 481.
Again in the case of Carter v. Carter Coal Co., supra, 298 U.S. 238, at page 291, 56 S.Ct. 855, 864, 80 L.Ed. 1160, the court said:
“The proposition, often advanced and as often discredited, that the power of the federal government inherently extends to purposes affecting the Nation as a whole with which the states severally cannot deal or cannot adequately deal, and the related notion that Congress, entirely apart from those powers delegated by the Constitution, may enact laws to promote the general welfare, have never been accepted but always definitely rejected by this court.”
And again on page 292 of 298 U.S., 56 S.Ct. 855, 864, 80 L.Ed. 1160:
“In the Framers Convention, the proposal to confer a general power akin to that just discussed was included in Mr. Randolph’s resolutions, the sixth of which, among other things, declared that the National Legislature ought to enjoy the legislative rights vested in Congress by the Confederation; and ‘moreover to legislate in all cases to which the separate States are incompetent, or in which the harmony of the United States may be interrupted by the exercise of individual Legislation.’ The convention, however, declined to confer upon Congress power in such general terms; instead of which it carefully limited the powers which it thought wise to intrust to Congress by specifying them, thereby denying all others not granted expressly or by necessary implication. It made no grant of authority to Congress to legislate substantively for the general welfare, United States v. Butler, supra, 297 U.S. 1, at page 64, 56 S. Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914; and no such authority exists, save as the general welfare may be promoted by the exercise of the powers which are granted.”
It is well settled that taxation by Congress is limited to those forms of taxes described in section 8 of article 1 of the Constitution, and with respect to these the only limitations are, that a direct tax shall be apportioned between the states and that duties, imposts, and excises shall be uniform and be levied only for the purposes named therein.
Is the tax imposed on employers under section 901 of title IX (42 U.S.C.A. § 1101) an excise tax within the meaning of section 8 of article 1‘ of the Federal Constitution? -If it is not, it is not a tax that Congress is authorized to levy. No other provisions of the Constitution than section 8 of article 1 give any powers to Congress to levy taxes and the kind of taxes it might levy are expressly defined therein as direct taxes, duties, imposts, and excise taxes, and these can only be levied to pay the debts and provide for the common defense and general welfare of the United States.
At the time of the adoption of the Constitution the term “excise tax” was used only in connection with a tax on goods, merchandise, and commodities.
Blackstone in his Commentaries, 1 Blackstone, p. 308, in speaking of the different forms of taxation, said:
“Directly opposite in its nature to this (direct tax) is the excise duty; which is an inland imposition, paid sometimes upon the consumption of the commodity, or frequently upon the retail sale, which is the last stage before the consumption.”
Adam Smith in 1776 in his “The Wealth of Nations,” said:
“The duties of excise are imposed chiefly upon goods of home produce destined for home consumption. They are imposed only upon a few sorts of goods of the more general use. * * * They fall almost altogether upon what I call luxuries.”
The tax imposed by the British Act of 1777 and cited by the government in sup*374port of its contention was clearly a luxury tax on male servants. It did not apply to any servant employed for the purpose of husbandry or manufacture, or of any trade or calling by which the employer of such servant earned a profit.
Hamilton in the Federalist, No. 21, speaking of excises, describes them as “Taxes on articles of consumption.”
Gallatin speaks of an excise tax as an excise on “consumable commodities.”
As defined in Bouvier’s Law Dictionary, Rawle’s Third Revision, p. 551, commodity is a broader term than merchandise and “may mean almost any description of articles called movable or personal estate. Labor is not a commodity. [Rohlf v. Kase-meier, 140 Iowa, 182, 118 N.W. 276] 23 L. R.A.(N.S.) 1285 [132 Am.St.Rep. 261, 17 Ann.Cas. 750].”
In the discussions in the several state conventions, both as to the adoption of the Federal Constitution and with reference to the adoption of the respective state constitutions, it seems apparent that the understanding of the term “excise tax” was a tax laid upon articles of . use or consumption, not according to their value, but an arbitrary amount fixed by the Legislature; and the term “commodity” appears to have been used in its ordinary sense as including goods, wares, merchandise, produce of the land and manufacture.
Massachusetts in framing its Constitution in 1780, in addition to the ordinary direct taxes, authorized the Legislature to impose “reasonable duties and excises upon any produce, goods, wares, merchandise and commodities whatsoever.”
Notwithstanding the definition of the word “commodities” found in the dictionaries, the Supreme Court of Massachusetts gave to the word a broader meaning than the lexicographers in the case of Portland Bank v. Apthorp, 12 Mass. 252, 256:
“This last word [commodities] will perhaps embrace every thing, which may he a subject of taxation, and has been applied by our legislature, from the earliest prac-tise under the constitution, to the privilege of using-particular branches of business or employment, as "the business of an auctioneer, of an attorney, of a tavern keeper, of a retailer of spirituous liquors, etc.
“It must have been under this general term commodity, which signifies convenience, privilege, profit and gains, as well as goods and wares, which are only its vulgar signification, that the legislature assumed the right which has been uniformly and without complaint exercised for thirty years, of exacting a sum of money from attorneys, and barristers at law, ven-due masters, tavern keepers and retailers.”
The same construction was expressed in O’Keeffe v. Somerville, 190 Mass. 110, 76 N.E. 457, 458, 112 Am.St.Rep. 316, 5 Ann. Cas. 684:
“It is not necessary in the present case to determine the meaning of the word ‘commodities,’ in reference to every possible application of it, but we are of opinion that it is not broad enough to include every occupation which one may follow, in the exercise of a natural right, without aid from the government, and without affecting the rights or interests of others in such a way as properly to call for governmental regulation. Whatever may be done by the Congress of the United States under its general power to levy excise taxes (see Thomas v. United States, 192 U.S. 363, 24 S.Ct. 305, 48 L.Ed. 481), we are of opinion that, under the limitation to commodities, the general court of Massachuetts cannot levy an excise tax upon the business of a husbandman or an ordinary mechanic.' If this is not the necessary effect of the decision in Gleason v. McKay [134 Mass. 419], ubi supra, it certainly is intimated by the language of the court in the opinion.”
While the Federal Constitution does not contain the word “commodities” as a basis for levying excise taxes, there appears to be. little, if any, difference in the limits imposed upon the interpretation of section 8 of article 1 by the Supreme Court of the United States and the interpretation placed on the constitutional provision of Massachusetts by the Massachusetts Supreme Court.
Mr. Justice Story in his work on the Constitution, §§ 907, 908, says of section 8 of article 1 of the Constitution:
“Before proceeding to consider the nature and extent of the power conferred by this clause, and the reasons on which it is founded, it seems necessary to settle the grammatical construction of the clause, and to ascertain its true reading. Do the words, ‘to lay and collect taxes, duties, imposts, and excises’, constitute a distinct substantial power; and the words, ‘to pay the debts and provide for the common defence and general welfare of the United States,’ constitute another distinct and substantial power ? Or are, the latter words connect*375ed with the former so as to constitute a qualification upon them? This has been a topic of political controversy, and has furnished abundant material for popular declamation and alarm. If the former be the true interpretation, then it is obvious that under color of the generality of the words “and provide for the common defense and general welfare,’ the government of the United States is, in reality, a government of general and unlimited powers, notwithstanding the subsequent enumeration of specific powers. If the latter be the true construction, then the power of taxation only is given by the clause, and it is limited to objects of a national character, ‘to pay the debts and provide for the common defense and the general welfare.’ § 908. The former opinion has been maintained by some minds of great ingenuity and liberality of views. The latter has been the generally received sense of the nation, and seems supported by reasoning at once solid and impregnable. * * * In this sense, Congress has not an unlimited power of taxation; but it is limited to specific objects, — the payment of the public debts, and providing for the common defense and general welfare. A. tax, therefore, laid by Congress for neither of these objects, would be unconstitutional, as an excess of its legislative authority.”
Excise taxes were defined in Patton v. Brady, 184 U.S. 608, 617, 22 S.Ct. 493, 496, 46 L.Ed. 713, as:
“An inland imposition, paid sometimes upon the consumption of the commodity, or frequently upon the retail sale, which is the last stage before the consumption.” And on page 618 of 184 U.S., 22 S.Ct. 493, 497, 46 L.Ed. 713: “To determine, then, what excise means, we have for our guidance, first, an enumeration of the articles that it fell on in Great Britain in 1787. We have, second, the nature of the tax as judicially determined; and we have, third, the definition of it, or .the common understanding of men about it, as given by the Encyclopedia Brittanica and the Century Dictionary. Taking these three sources of information and combining them, it would seem that the leading idea of excise is that it is a tax, laid without rule or principle, upon consumable articles, upon the process of their manufacture and upon licenses to sell them.”
The court in Flint v. Stone Tracy Co., 220 U.S. 107, 151, 31 S.Ct. 342, 349, 55 L. Ed. 389, Ann.Cas.l912B, 1312, adopted the definition of excise taxes found in Cooley on Constitutional Law (7th Ed.) p. 680:
“Excises are ‘taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges,’ ” which appears to cover the entire ground.
A somewhat broader definition of excise taxes is found in Thomas v. United States, 192 U.S. 363, 370, 24 S.Ct. 305, 306, 48 L.Ed. 481:
“There is no occasion to attempt to confine the words duties, imposts, and excises to the limits of precise definition. We think that they were used comprehensively to cover customs and excise duties imposed on importation, consumption, manufacture, and sale of certain commodities, privileges, particular business transactions, vocations, occupations, and the likeA (Italics supplied.)
• Section 901 of title IX (42 U.S.C.A. § 1101) under consideration declares the tax imposed on all employers to be an excise tax, but as the Supreme Court said in Flint v. Stone Tracy Co., supra, 220 U.S. 107, at page 145, 31 S.Ct. 342, 346, 55 L.Ed. 389, Ann.Cas.l912B, 1312:
“While' the mere declaration contained in a statute that it shall be regarded as a tax of a particular character does not make it such if it is apparent that it cannot be so designated consistently with the meaning and effect of the act," although such a declaration may “be entitled to some weight.”
It was also held in Flint v. Stone Tracy Co., supra, that the corporation tax imposed under the Tariff Law of 1909 was valid as an excise tax; but in Gleason v. McKay, 134 Mass. 419, 424, where the court was considering a tax laid on firms, copartnerships, and other associations, it was said:
“It will not be seriously contended that the privileges or rights which are taxed by this statute can be properly described as either produce, goods, wares or merchandise. Do they fairly come within the term ‘commodities,’ in the sense in which it is used in the Constitution? Ever since the adoption of the Constitution, the Legislature in its practice, and this court in its adjudications, have given a very broad and extensive meaning to this term. It has been repeatedly held that corporate franchises enjoyed by grant from the government are commodities, and subject to *376an excise. So with corporate franchises granted by a foreign government, which by comity are permitted to be exercised within this Commonwealth. So where the Legislature has thought, upon considerations of public policy, that certain occupations or callings, of a public or quasi public character, should be carried on under governmental regulation, it has been usual to impose a reasonable fee for a license.”
The defendant in the above case not being a corporation, but a common-law partnership “it enjoyed no franchise or special privilege conferred upon it by the Legislature, but was exercising a common right.” Opinion of Justices, 266 Mass. 590, 592, 593, 165 N.E. 904, 63 A.L.R. 952.
In contrasting these two propositions, the Justices in their opinion in 247 Mass. 589, 593, 143 N.E. 808, 810, said:.
"The right to set up and maintain the-atres and other places of public amusement is not natural and inherent. Working by an artisan at his trade, carrying on an ordinary business, or engaging in a common occupation or calling cannot be subjected to a license fee or excise. These plainly are not affected with a public interest” — citing Gleason v. McKay, supra; O’Keeffe v. Somerville, supra.
And on page 597 of 247 Mass., 143 N.E. 808,- 811:
“The rights to labor and to do ordinary business are natural, essential and inalienable, partaking of the nature both of personal liberty and of private property.”
Cases in which excise taxes have been upheld are: Hylton v. United States, 3 Dallas, 171, 1 L.Ed. 556; License Tax Cases, 5 Wall. 462, 18 L.Ed. 497; Veazie Bank v. Fenno, 8 Wall. 533, 19 L.Ed. 482; Thomas v. United States, 192 U.S. 363, 370, 24 S.Ct. 305, 48 L.Ed. 481; Billings v. United States, 232 U.S. 261, 34 S.Ct. 421, 58 L. Ed. 596; Nicol v. Ames, 173 U.S. 509, 19 S.Ct. 522, 43 L.Ed. 786; Patton v. Brady, 184 U.S. 608, 22 S.Ct. 493, 46 L.Ed. 713; McCray v. United States, 195 U.S. 27, 24 S.Ct. 769, 49 L.Ed. 78, 1 Ann.Cas. 561; Scholey v. Rew, 23 Wall. 331, 23 L.Ed. 99; Knowlton v. Moore, 178 U.S. 41, 20 S.Ct. 747, 44 L.Ed. 969; see, also, Flint v. Stone Tracy Co., 220 U.S. 107, 31 S.Ct. 342, 55 L.Ed. 389, Ann.Cas.l912B, 1312; Spreckels Sugar Refining Co. v. McClain, 192 U.S. 397, 24 S.Ct. 376, 48 L.Ed. 496; Stratton’s Independence, Limited, v. Howbert, 231 U.S. 399, 34 S.Ct. 136,- 58 L.Ed. 285; Doyle v. Mitchell Brothers Co., 247 U.S. 179, 183, 38 S.Ct. 467, 62 L.Ed. 1054; Stanton v. Baltic Mining Co., 240 U.S. 103, 114, 36 S.Ct. 278, 60 L.Ed. 546.
The Child Labor Tax Case, 259 U.S. 20, 42 S.Ct. 449, 66 L.Ed. 817, 21 A.L.R, 1432; Carter v. Carter Coal Co., 298 U.S. 238, 56 S.Ct. 855, 80 L.Ed. 1160; United States v. Butler, 297 U.S. 1, 56 S.Ct. 312, 80 L.Ed. 477, 102 A.L.R. 914; Grosjean v. American Press Co., Inc., et al., 297 U.S. 233, 56 S.Ct. 444, 80 L.Ed. 660; and Hill v. Wallace, 259 U.S. 44, 42 S.Ct. 453, 66 L.Ed. 822, are cases where so-called excise taxes have been held not to be within the powers vested in Congress as involving matters reserved to the states.
But nowhere do we find that an excise tax has ever been imposed in this country on the natural right to employ labor in manufacturing, or in any trade or calling for profit.
It is urged that the tax imposed under section 901 of title IX (42 U.S.C.A. § 1101) is imposed on the privilege of doing business. If Congress had so intended, we think it would have said so. Section 901 does not impose a tax on any business in which any employer may be engaged, nor on the manufacture of any goods, wares, merchandise, or commodity, but solely with respect to having in one’s employ eight or more employees, the amount of the tax being based on the amount of the total pay roll.
One can conceive of a case where a person might have in his employ eight em) ployees during each of twenty days, or part of a day, during a taxable .year — though not at the same moment of time — but in different calendar weeks, and could not be said to be engaged in any business in so doing. For instance, a physician or a lawyer may decide to construct a house for himself by day labor. In so doing he cannot be said to be engaged in the business of building houses or contracting; but simply doing what every person has a natural right to do in the pursuit of happiness and in the exercise of the liberty guaranteed to him under the Fifth Amendment of the Constitution. He employs common laborers, masons, carpenters, plumbers, electricians, painters, steamfitters, and it may well be that during the construction of his home he might find that he has hacf for one day, "or a part of a day — though not at the same moment of time — during twenty weeks, though not even in conseeii-1' tive weeks — eight employees at work in *377constructing his house; and, while it cannot be said that his business is that of house building, under section 907 of title IX (42 U.S.C.A. § 1107) he is subject to the tax imposed under section 901.
It is idle to contend that section 901 of title IX (42 U.S.C.A. § 1101) can be separated from the remainder of title IX and from title III (sections 901 et seq., 301 et seq. [42 U.S.C.A. §§ 1101 et seq., 501 •et seq.]) in considering the purpose of Congress in enacting these titles, or that the tax on employers is merely an excise tax for the purpose of raising general revenue. It is obvious that title IX and title III together were intended to compel the states to impose taxes on all employers except those exempt under section 907 (c), in order to provide unemployment compensation within the states which Congress could not do. The federal government then proceeds under section 902 and 903 of title IX (42 U.S.C.A. §§ 1102, 1103) to retain control over the funds, 90 per cent, of which under section 902 may have been imposed under section 901, and impose the conditions under which they may be distributed in the states.
“It is urged that the federal act and any state act are entirely independent of each other, but, in the light of the alleged coordinating features of the Act of Congress and the requirements imposed on the state in order to obtain funds for the unemployed in each state, the court cannot shut its eyes to the compelling and regulatory features of the congressional act. Child Labor Tax Case, supra, 259 U.S. 20, at page -37, 42 S.Ct. 449, 450, 66 L.Ed. 817, 21 A.L.R. 1432.
“ ‘The Constitution, in all its provisions, looks to an indestructible Union, composed of indestructible States.’ Every journey to a forbidden end begins with the first step; and the danger of such a step by the federal government in the direction of taking over the powers of the states is that the end of the journey may find the states so despoiled of their powers, or— what may amount to the same thing — so relieved of the responsibilities which possession of the powers necessarily enjoins, as to reduce them to little more than geographical subdivisions of the national domain. It is safe to say that if, when the Constitution was under consideration, it had been thought that any such danger lurked behind its plain words, it would never have been ratified.” (Italics supplied.) Carter v. Carter Coal Co., supra, 298 U.S. 238, at page 295, 56 S.Ct. 855, 866, 80 L.Ed. 1160.
It is said that a state is not obliged to pass an unemployment act, and many states have not done so. Neither were employers obliged to comply with the Child Labor Law (40 Stat. 1138, 42 Stat. 306)— they could have paid the tax or penalty — or farmers to reduce their acreage in accordance with the provisions of the Agricultural Adjustment Act (7 U.S.C.A. § 601 et seq.)- — -they could have refused the aid— but the consequences of failure to do so were such that they could not afford to do otherwise. So in this case, if a state does not pass an unemployment compensation act complying with the requirement of Congress, or of the proper federal bureau, the entire tax assessed on employers under section 901 goes into the United States Treasury. Such a state must itself bear whatever financial burdens result to it from unemployment in its industries. No payments for unemployment assistance are made from the Federal Treasury. A state may not comply at once, but, if the act is held valid, the disadvantages resulting to the state and its employers and the consequent dissatisfaction of its employees, it is quite obvious, will sooner or later compel all the states to enact such legislation, and in such form as will receive the approval of the Social Security Board created by the act. That this amounts to coercion of the states and control by Congress of a matter clearly within the province of the states cannot be denied. If valid, it marks the end of responsible state government in any field in which the United States chooses to take control by the use of its taxing power. If the United States can take control of unemployment insurance and old age assistance by the coercive use of taxation, it can equally take control of education and local health conditions by levying a heavy tax and remitting it in the states which conform their educational system or their health laws to the dictates of a federal board. It is a significant fact that many of the acts in the states provide that the state law shall not remain in effect if title IX is declared unconstitutional, which indicates beyond a doubt that the states in self-defense consider themselves compelled by the act of Congress to enact a state law. It is plainly the duty of the courts to uphold and support the present Constitution until it has been changed in the legal way.
*378While courts will hot declare acts of Congress of no effect because some other motive outside the powers of Congress may have actuated Congress in passing it, though not shown on the face of the act, the provisions of an act of Congress must be reasonably adapted to some purpose within the powers vested in Congress and not with a view to accomplishing some other purpose wholly reserved to the states. Linder v. United States, 268 U.S. 5, 17, 45 S.Ct. 446, 448, 69 L.Ed. 819, 39 A.L.R. 229.
As to the wisdom, as a social aim, of providing for the unfortunate, the dependent, or those permanently or temporarily unable to earn a livelihood, we are in sympathy; but, even though we may think an act of Congress embodies a commendable social plan and are in sympathy with its purpose and intended results, if its provisions go beyond the limits of federal power and extend into the field of power reserved to the states, we must so declare. Railroad Retirement Board v. Alton R. R. Co., 295 U.S. 330, 347, 55 S.Ct. 758, 761, 79 L.Ed. 1468.
However general such social needs may be in the states as sovereign units, they are not necessarily a part of the general welfare of the United States. Schechter Poultry Corp. v. United States, supra; Railroad Retirement Board v. Alton R. R. Co., supra; Carter v. Carter Coal Co., supra, 298 U.S. 238, at pages 290, 291, 56 S.Ct. 855, 863, 864, 80 L.Ed. 1160. If the dual form of our government is to be maintained as conceived by the framers of the Federal Constitution, the genei'al welfare of some or even of all the states in matters reserved to the states, when taken together, cannot be held to constitute the general welfare of the United States within the meaning of section 8 of article 1 of the Constitution.
Therefore, to provide unemployment benefits regardless of need, to persons who have worked in local employments in local trade and manufacturing within a state, not related to interstate commerce, or in any calling not related to the matters subject to the control of the Congress, is not to provide for the general welfare of the United States.
There is no warrant for taking the property or money of an employer and transferring it to his employees without compensation, not even by taxation, Citizens’ Savings & Loan Association v. Topeka, 20 Wall. 655, 22 L.Ed. 455, whether the purpose is a commendable one or not. Title IX, coupled with title III, is an attempt by Congress to impose a tax on employers of eight or more as a means of assuring certain employees, deprived of employment for any reason, of a certain amount of compensation during their period of unemployment, and to regulate the conditions under which such employees shall be entitled to aid.
“A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the government. The word has never been thought to connote the expropriation of money from one group for the benefit of another. * * * The exaction cannot be wrested out of its setting, denominated an excise for raising revenue and legalized by ignoring its purpose as a mere instrumentality for bringing about a desired end. To do this would be to shut our eyes to what all others than we can see and understand.” United States v. Butler, supra, 297 U.S. 1, at page 61, 56 S.Ct. 312, 317, 80 L.Ed. 477, 102 A.L.R. 914.
If the act is carried out as planned by Congress, and a tax is imposed on every employer which is credited against a tax imposed by the state, and, under the conditions imposed by section 302 and 303 of title III and section 903 of title IX (42 U. S.C.A. §§ 502, 503, 1103), is paid to employees found to be eligible, it amounts, in effect, to taking the property of every employer for the benefit of a certain class of employees. The entire plan, viewed as a whole, is an attempt to do indirectly what Congress cannot do directly, a,nd to assume national control over a subject clearly within the jurisdiction of the states.
Congress by the provisions of section 903 not only takes charge of the funds raised by the states, but has undertaken to dictate the terms of state legislation in relation to the conditions under which a person is entitled to receive unemployment compensation under a state act.
The federal government has no power, granted or inherent, in respect to the internal affairs of the states. Carter v. Carter Coal Co., supra, 298 U.S. 238, at page 295, 56 S.Ct. 855, 865, 80 L.Ed. 1160. It has no right to say to the several states that, in order to obtain aid for the unemployed in its industries, they must enact statutes which shall provide that:
(1) All unemployment compensation must be paid through public employment *379•offices in the state or such other agencies •as a federal board may approve.
(2) No compensation shall be payable with respect to any day of unemployment ■occurring within two years after the first day of the first period with respect to which contributions are required.
(3) All money received in the “unemployment fund” (from state taxes) shall immediately upon such receipt be paid over to the Secretary of the Treasury to the •credit of the Unemployment Trust Fund established by section 904 of Title IX (42 U.S.C.A. § 1104).
(4) All money withdrawn from the Unemployment Trust Fund by the state agency shall be used solely in the payment •of compensation, exclusive of expenses of •administration.
(5) Compensation shall not be denied in .such state to any otherwise eligible individual for refusing to accept new work under any of the following conditions: (A) If the position offered is vacant due ■directly to a strike, lockout, or other labor dispute; (B) if the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality; (C) if as a condition of being employed the individual would be required to join a company union or to resign from or refrain from joining any bona fide labor organization.
Instances are cited of appropriations by Congress for the aid of states in caring for relief of its citizens and in aid of those unable to earn a livelihood, for flood relief in the states, for relief from drought in certain agricultural states, or to relieve losses from earthquakes, here or abroad, or from disastrous fires, and particularly to aid or relieve suffering in other countries, but no special tax was imposed for these. Here the national government is undertaking to impose its will on the several states in regard to one of the oldest and most universal problems in human life: The care of children, of old people, and in aid of the unemployed. In this country it has always been done locally or by the states. Numerous cases can be cited of appropriations made for purposes not within the connotation of the term “general welfare of the United States,” but they have never been questioned, and there is no process to prevent an appropriation for such purposes by Congress, as was decided in Massachusetts v. Mellon (Frothingham v. Mellon), 262 U.S. 447, 486, 487, 43 S. Ct. 597, 600, 601, 67 L.Ed. 1078, and in State of Florida v. Mellon, 273 U.S. 12, 18, 47 S.Ct. 265, 266, 71 L.Ed. 511; United States v. Butler, supra, 297 U.S. 1, at page 73, 56 S.Ct. 312, 322, 80 L.Ed. 477, 102 A.L. R. 914. The remedy, if one is necessary, is with the people who select their representatives.
President Cleveland, in 1887, vetoed an attempted act of Congress to aid counties in Texas injured by drought, saying in his veto message:
“I can find no warrant for such an appropriation in the Constitution. The lesson should be constantly enforced that, though the people should support the government, the government should not support the people.”
A unanimous court in Schechter Poultry Corp. v. United States, supra, 295 U.S. 495, at page 549, 55 S.Ct. 837, 851, 79 L. Ed. 1570, 97 A.L.R. 947, said that:
“The government also makes the point that efforts to enact state legislation establishing high labor standards have been impeded by the belief that, unless similar action is taken generally, commerce will be diverted from the states adopting such standards, and that this fear of diversion has led to demands for federal legislation on the subject of wages and hours. The apparent implication is that the federal authority under the commerce clause should be deemed to extend to the establishment of rules to govern wages and hours in intrastate trade and industry generally throughout the country, thus overriding the authority of the states to deal with domestic problems arising from labor conditions in their internal commerce.
“It is not the province of the Court to consider the economic advantages or disadvantages of such a centralized system. It is sufficient to say that the Federal Constitution does not provide for it.”
As stated above, the issue is not what powers Congress ought- to have to meet conditions as viewed by the executive and legislative branches of the government, but what powers are vested in Congress under the Constitution. The Supreme Court through a long series of opinions has defined those powers and the limitations upon them. If the Constitution, as construed through the years, requires amendments to meet new conditions, the way is provided therein.
*380While state courts have in passing on state unemployment acts held them not to be violative of the constitutional provisions of their respective states, as the Massachusetts Supreme Court in the case of Howe Brothers Company v. Unemployment Compensation Commission, 5 N.E. (2d) 720, has recently decided, it is significant that it did not sustain the taxation provisions of the Massachusetts Unemployment Act as imposing excise taxes, but as an exercise of its police powers, and provided that the state law should not be valid in case the federal act was held to be beyond the constitutional powers of Congress —indicating, we thi’nk, that the state acted under coercion.
It seems to be generally agreed the regulation of employment in the states is a matter solely within their jurisdiction. This, we understand, was the basis of the court’s decision in the recent minimum wage law of the state of Washington for women; and only in matters where Congress has control, as in interstate commerce or in the District of Columbia, may Congress regulate the wages and hours of labor.
In a case recently decided by the Supreme Court of Canada, Canada Law' Reports, 1936, part VII, page 454, approved by the British Privy Council, an act of the Dominion Parliament, relating to social insurance, was held to invade the field exclusively reserved by the constitution to the legislatures of each province; and in the case of James v. Commonwealth of Australia, 1936, A.C. 578, in which an act of the commonwealth of Australia was under consideration to control and limit the products of agriculture, it was held unconstitutional by the British Privy Council. Lord Wright, Master of the Rolls, page 633, in holding the act unconstitutional, said:
“But these inconveniences are liable to flow from a written constitution. Their Lordships cannot arrive at any conclusion save that they could 'not give effect to the respondents’ contention consistent with any construction of the constitution which is in accord with sound principles of interpretation. To give that effect would amount to rewriting, not construing, the constitution. That is not their Lordships’ function.”
While we accept certain of the premises laid down by the court in the cases of Beeland Wholesale Company v. Harwell G. Davis, Collector of Internal Revenue (C.C.A.) 88 F. (2d) 447 and Charles C. Steward Machine Company v. Davis (C.C. A.) 89 F.(2d) 207, recently decided in the Fifth Circuit, we are unable to adopt its conclusions as to the validity of title IX of the federal act. The case of Gillum v. Johnson et al. (62 P.(2d) 1037, rehearing denied 63 P.(2d) 810) decided by the Supreme Court of California, can hardly be said to have considered, except by way of dicta, the issues raised in the case at bar.
The decree of the District Court is reversed, with costs, and the case is remanded to that court for further proceedings in accordance with this opinion.

 Sec. 901. On and after January 1, 1936, every employer (as defined in section 907 [section 1107 of this chapter]) shall pay for each calendar year an excise tax, with respect to having individuals in his employ, equal to the following percentages of the total wages (as defined in section 907 [section 1107 of this chapter]) payable by him (regardless of the time of payment) with respect to employment (as defined in section 907 [section 1107 of this chapter]) during such calendar year;
(1) With respect to employment during the calendar year 1936 the rate shall be 1 per centum;
(2) With respect to employment during the calendar year 1937 the rate shall be 2 per centum;
(3) With respect to employment after December 81, 1937, the rate shall be 3 per centum.
Sec. 902. The taxpayer may credit against the tax imposed by section 901 [section 1101 of this chapter] the amount of contributions, with respect to employ*371ment during the taxable year, paid by him (before the date of filing his return for the taxable year) into an unemployment fund under a State law. The total credit allowed to a taxpayer under this section for all contributions paid into unemployment funds with respect to employment during such taxable year shall not exceed 90 per centum of the tax against which it is credited, and credit shall be allowed only for contributions made under the laws of States certified for the taxable year as provided in section 903 [section 1103 of this chapter].
See. 903. (a) The Social Security Board shall approve any State law submitted to it, within thirty days of such submission, which it finds provides that—
(1) All compensation is to be paid through public employment offices in the State or such other agencies as the Board may approve;
(2) No compensation shall be payable with respect to any day of unemployment occurring within two years after the first day of the first period with respect to which contributions are required ;
(3) All money received in the unemployment fund shall immediately upon such receipt be paid over to the Secretary of the Treasury to the credit of the Unemployment Trust Fund established by section 904 [section 1104 of this chapter] ;
(4) All money withdrawn from the Unemployment Trust Fund by the State Agency shall be used sdlely in the payment of compensation, exclusive of expenses of administration;
(5) Compensation shall not be denied in such State to any otherwise eligible individual for refusing to accept new work under any of the following conditions: (A) If the position offered is vacant due directly to a strike, lockout, or other labor dispute; (B) if the wages, hours, or other conditions of the work offered are substantially less favorable to the individual than those prevailing for similar work in the locality; (C) if as a condition of being employed the individual would be required to join a company union or to resign from ¿or refrain from joining any bona fide labor organization ;
(6) All the rights, privileges, or immunities conferred by such law or by acts done pursuant thereto' shall exist subject to the power of the legislature to amend or repeal such law at any time. The Board shall, upon approving such law, notify the Governor of the State of its approval.
(b) On December 31, in each taxable year the Board shall certify to the Secretary of the Treasury each State whose law it has previously approved, except that it shall not certify any State which, after reasonable notice and opportunity for hearing to the State agency, the Board finds has changed its law so that it no longer contains the provisions specified in subsection (a) or has with respect to such taxable year failed to comply substantially with any such provision.
(c) If, at any time during the taxable year, the Board has reason to believe that a State whose law it has previously approved, may not be certified under subsection (b), it shall promptly so notify the Governor of such State.
Sec. 904. (a) There is hereby established in the Treasury of the United States a trust fund to be known as the *372“Unemployment Trust Fund”, hereinafter [in this title] called the “Fund”. The Secretary of the Treasury is authorized and directed to receive and hold in the Fund all moneys deposited therein by a State agency from a State unemployment fund. Such deposit may be made directly with the Secretary of the Treasury or with any Federal reserve bank or member bank of the Federal Reserve System designated by him for such purpose.
(b) It shall be the duty of the Secretary of the Treasury to invest such portion of the Fund as is not, in his judgment, required to meet current withdrawals. Such investment may be made only in interest bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States. For such purpose such obligations may be acquired (1) on original issue at par, or (2) by purchase of outstanding obligations at the market price. The purposes for which obligations of the United States may be issued under the Second Liberty Bond Act, as amended [section 752 of Title 31], are hereby extended to authorize the issuance at par of special obligations exclusively to the Fund. Such special obligations shall bear interest at a rate equal to the average rate of interest, computed as of the end of the calendar month next preceding the date of such issue, borne by all interest-bearing obligations of the United States then forming part of the public debt; except that where such average rate is not a multiple of one-eighth of 1 per centum, the rate of interest of such special obligations shall be the multiple of one-eighth of 1 per centum next lower than such average rate. Obligations other than such special obligations may be acquired for the Fund only on such terms as to provide an investment yield not less than the yield which would be required in the case of special obligations if issued to tire Fund upon the date of such acquisition.
(c) Any obligations acquired by the Fund (except special obligations issued exclusively to the Fund) may be sold at the market price, and such special obligations may be redeemed at par plus accrued interest.
(d) The interest on, and the proceeds from the sale or redemption of, any obligations held in the Fund shall be credited to and form a part of the Fund.
(e) The Fund shall be ‘invested as a single fund, but the Secretary of the Treasury shall maintain a separate book account for each State agency and shall credit quarterly on March 31, June 30, September 30, and December 31, of each year, to each account, on the basis of the average daily balance of such account, a proportionate part of the earnings of the Fund for the quarter ending on such date.
(f) The Secretary of the Treasury is authorized and directed to pay out of the Fund to any State agency such amount as it may duly requisition, not exceeding the amount standing to the account of such State agency at the time of such payment. 42 U.S.O.A. §§ 1101-1104.