STEWARD MACHINE COMPANY v. DAVIS

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Case Basics
Docket No. 
837
Petitioner 
Steward Machine Company
Respondent 
Davis
Term:
Facts of the Case 

The Steward Machine Company challenged the validity of a tax imposed by the Social Security Act. The Act established a federal payroll tax on employers; however, if employers paid taxes to a state unemployment compensation fund (created by the states subject to federal standards), they were allowed to credit those payments toward the federal tax.

Question 

Did the Act arbitrarily impose taxes in violation of the Fifth Amendment or subvert principles of federalism?

Conclusion 

In a 5-to-4 decision, the Court held that the tax under the Social Security Act was a constitutional exercise of congressional power. The Court found that the tax was uniform throughout the states and did not coerce the states in contravention of the Tenth Amendment. The Court took note of recent unemployment statistics from the years 1929 to 1936, maintaining that "[i]t is too late today for the argument to be heard with tolerance that in a crisis so extreme the use of the moneys of the nation to relieve the unemployed and their dependents is a use for any purpose narrower than the promotion of the general welfare. . .The nation responded to the call of the distressed."

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STEWARD MACHINE COMPANY v. DAVIS. The Oyez Project at IIT Chicago-Kent College of Law. 25 November 2014. <http://www.oyez.org/cases/1901-1939/1936/1936_837>.
STEWARD MACHINE COMPANY v. DAVIS, The Oyez Project at IIT Chicago-Kent College of Law, http://www.oyez.org/cases/1901-1939/1936/1936_837 (last visited November 25, 2014).
"STEWARD MACHINE COMPANY v. DAVIS," The Oyez Project at IIT Chicago-Kent College of Law, accessed November 25, 2014, http://www.oyez.org/cases/1901-1939/1936/1936_837.