Georgetown Law Journal
Comment, Cary McN. Euwer
28 (1939): 207
Posted for Educational use only. The printed edition remains canonical. For citational use please visit the local law library or obtain a back issue.

TAXATION-NATIONAL FIREARMS ACT OF 1934

In United States v. Miller42 a decision under the National Firearms Act of 1934 [43] the Court further extended control of traffic in a "criminal" commodity by the imposi- [Page 208] tion of a tax. The decisions under the Harrison Anti-Narcotic Act of 1914 [44] best illustrate the gradual development of this regulation incidental to taxation which the principal case continues to perhaps the most extreme length yet sanctioned.

In United States v. Jim Fuey Moy45 the Court held that the act must be narrowly construed as a revenue act and that penalties under the act were therefore applicable only to persons mentioned in the first section as required to be registered. It excluded all others, thus limiting the police powers exercised under the act to those necessary for the enforcement of the revenue measures.

United States v. Doremus46 was the first step away from the narrow construction of the Jim Fuey Moy case. Section 2 of the act required that all persons obtaining drugs from licensees legally possessing them should have certain order forms. This accomplished a regulation of the sale of the drugs closely bordering on an exercise of the reserved police power of the states. 7 These provisions were held to be constitutional on the grounds that "they tend to keep the traffic above board and subject to inspection by those authorized to collect the revenue.48

In Linder v. United States49 the Court, though not in any way overruling the prior narcotic decisions, held that the Harrison Act could not regulate the dispensing of drugs by a physician during the course of a bona fide medical practice. "Congress cannot," Mr. Justice McReynolds wrote, "under the pretext of executing delegated power, pass laws for the accomplishment of objects not intrusted to the federal government."50

In 1919 the act was amended51 to make federal control more certain. This was accomplished by making it unlawful for anyone to buy or sell any narcotics not contained in a package bearing a tax stamp. In Alston v. United States52 the Court upheld this provision on the grounds that it was a legitimate exercise of the congressional power to levy taxes. Mr. Justice McReynolds, writing for a unanimous Court stated: "These provisions (imposing a stamp tax on certain drugs and declaring it un- [Page 209] lawful to sell or purchase them except in the original stamped packages) are clearly within the power of Congress to lay taxes and have no necessary connection with any requirement of the Act which may be subject to reasonable disputation."53

In Nigro v. United States54 the Court took another step towards increasing federal control of traffic in narcotics by liberalizing the strict construction of the act to which it had earlier adhered in the Jim Fuey Moy case. The Court held that the act applied not only to persons required by the act to be registered but to all persons within the jurisdiction. Chief Justice Taft being of the opinion that: "It would seem to be admissible and wise in a law seeking to impose taxes for the sale of an elusive subject to require conformity to a prescribed method of sale and delivery calculated to disclose or make more difficult any escape from the tax."55

Consequently, federal control of the narcotic traffic has been so firmly established by means of the taxing power that no one can obtain or possess narcotics unless he is a registered dealer or doctor, or a patient of the latter.

The National Firearms Act of 1934,56 which attempts to restrict traffic in certain weapons, presents interesting developments in the Supreme Court's views in this field. Section 2 of the act levies taxes of $500 a year on importers and manufacturers, $200 on dealers and $300 year on pawnbrokers. Section 3 imposes a special stamp tax of $200 on every transfer of a firearm. Section 4 of the act makes it unlawful to transfer a firearm except with a stamp-affixed written order form.

In Sonzinsky v. United States47 section 2 of the act was upheld by the Court. The defendant contended that the levy was not a true tax but a penalty imposed for the purpose of restricting traffic in certain weapons, and that it attempted to usurp the police power reserved to the states. Mr. Justice Stone answered by saying: "A tax is not any the less a tax because it has a regulatory effect . . . . Here the annual tax of $200 is productive of some revenue. We are not free to speculate as to the motives which moved Congress to impose it, or as to the extent to which it may operate to restrict the activities taxed. As it is not attended by an offensive regulation, and since it operates as a tax, it is within the national taxing power."58

The Court emphasized the fact that the decision involved only sec- [Page 210] tion 2 and expressly reserved comment on sections 3 and 4 relating the transfer tax with its incidental regulations. "Full effect may be given to the license tax standing alone, even though all other provisions are invalid."59

In the most recent decision under the act United States v. Miller60 section 3 and 4 are brought before the Court. Without discussion of the merits of the challenge the Court contented itself with a citation of the six Harrison Act cases discussed above and concluded summarily, "the objection that the Act usurps police power reserved to the States is plainly untenable."61 Hence the Court has added another to the sequence of decisions defining control by the imposition of a tax with so-called incidental regulation in an opinion whose peremptory nature clearly points the trend of future decisions.

CARY MC N. EUWER*

*Comments on Child Labor Amendment cases written by Carl Schuck, comments on Fifteenth Amendment written by Harry B. Merican, comments on Taxation and the National Firearms Act written by Laidler B. Mackall, Jr.

42. U. S. 175 (1939).

43. STAT. 1236, 26 U. S. C. § 1132 (1934).

44. 38 STAT. 785 (1914), 26 U. S. C. 1040 (1934).

45. 241 U. S. 394 (1916).

46. 249 U. S. 86 (1919).

47. Chief justice White and justices McKenna, Van Deventer, and McReynolds merited believing this to be an invasion of the reserved police powers of the states.

48. 249 U. S. 86, 94 (1919).

49. 268 U. S. 5 (1925).

50. Id. at 17.

51. 40 STAT. 1057 (1919), 26 U. S. C. § 1696 (1934).

52. 274 U. S. 289 (1926).

53. Id. at 294.

54. 276 U. S. 332 (1927).

55. Id. at 345.

56. 48 STAT. 1236, 26 U. S. C. § 1132 (1934).

57. 300 U. S. 506 (1936).

58. Id. at 513.

59. Id. at 512.

60. 307 U. S. 175 (1939).

61. 307 U. S. 175,178 (1939).