Journal of Criminal Law and Criminology (Northwestern)
Casenote, Alvah Rogers, Jr.,
28 (1937-38 ): 139
Posted for Educational use only. The printed edition remains canonical. For citational use please visit the local law library or obtain a back issue. 

 NATIONAL FIREARMS ACT-TAX ON DEALERS- [Federal] The extending arm of federal control in the, suppression of organized crime and the public interest therein renders significant the recent decision of the Supreme Court of the United States upholding the constitutionality of Section 2 of the National Firearms Act. 48 Stat. 1237 (1934), 26 U. S. C. A. §1132a (1935). This section imposes a $200 annual license tax on dealers handling certain types of firearms, essentially sawed-off shotguns and submachine guns, defined in Section 1. Violations of the Act are punishable by a fine of $2,000 or imprisonment for five years or both.

Petitioner, who was convicted by the District Court for Eastern Illinois of unlawfully carrying on the business of dealer in firearms without payment of the special tax, was granted certiorari solely on the question of the constitutionality of Section 2 of the Act, the conviction on a count involving that section alone having been sustained by the circuit court of appeals, 86 F. (2d) 486 (C. C. A. 7th, 1936). The Supreme Court held that the imposition of a $200 annual tax on dealers in firearms is constitutional as a valid exercise of the taxing power of Congress, refusing to look beyond the face of the Act to condemn it as a regulation of matters beyond the power of Congress. Sonzinsky v. United States, 57 S. Ct. 554 (1937).

The Supreme Court in refusing to consider the unexpressed regulatory aspects of this taxing statute merely conformed to its policy of long standing, first clearly expressed in the early case of Veazy Bank v. Fenno, 75 U. S. 533 (1869). There, in commenting upon the contested federal tax on state bank currency, the Court said, "It can hardly be doubted that the object of this provision was to inform the proper authorities of the exact amount of paper money in circulation. With a view to its regulation by law." Yet, since the statute on its face was no more than an excise tax, its constitutionality was sustained. Compare the statements of District Judge Ritter in another case sustaining the National Firearms Act: "The [Act] is a revenue measure. Back of it may have been a motive to prevent racketeers, bank robbers, and desperadoes from obtaining sawed-off shotguns and machine guns to run wild in crime and to enable the government to trace ownership; but where there is a power to tax, which from a reasonable construction can be construed to be the intention, the imposition of the tax is the determining feature and cannot be treated as being without the power because of the destructive effect of exercise of the authority upon the article or business connected therewith." United States v. Adams, 11 F. Supp. 216, 218 (S. D. Fla. 1935). The Court rejected defendant's contention that the Act violated the Second Amendment to the Constitution preserving the right of citizens to bear arms, stating that it refers only to the militia.

Federal regulation of other dis- [Page 140] favored articles through the taxing power has long received the sanction of the Supreme Court. The suppression of oleomargarine products in favor of butter by an equalizing tax on the former was held a constitutional exercise of the federal -taxing power in the famous case of McCray v. United States, 195 U. S. 27 (1904); Vail Butterine Co. v. Reinecke, 39 F. (2d) 1076 (1931); Cf. In re Kollock, 165 U. S. 526 (1897). And the source of federal control over narcotics is found in the several excise taxes on producers, importers, dealers, etc., of narcotic drugs imposed by the Harrison Anti-Narcotics Act. That Act was initially held constitutional in the case of United States v. Doremus, 249 U. S. 86 (1919) and has been repeatedly sustained up to the present. See Watson v. United States, 16 F. (2d) 52 (1926), cert. denied, 274 U. S. 739. The National Firearms Act closely follows in form the Harrison Anti-Narcotics Act as amended.

It may safely be stated that the attempts by Congress to regulate in forbidden fields through the taxing power have failed when the taxing act expresses regulation on its face. Such was the case in United States v. Constantine, 296 U. S. 287 (1935), where a special annual excise tax of $1,000 on retail liquor dealers when they operate contrary to state or municipal law was held a penalty rather than a tax, the effect being to usurp the police powers of the states, rendering the Act unconstitutional. Similar holdings may be found in the Child Labor Tax case, 259 U. S. 20 (1922), and Carter v. Carter Coal Co., 298 U. S. 238 (1936) (Guffey Coal Act unconstitutional).

Although petitioner here was indicted in a second count for violation of Sections 3 and 4 of the National Firearms Act, the circuit court of appeals held that the evidence was insufficient to support a conviction there under. The Supreme Court thus had no opportunity to pass upon the constitutionality of these sections. Section 3 imposes a patently prohibitive tax of $200 upon each transfer of a firearm described in Section 1, and Section 4 requires identification of purchasers, including their fingerprints. Section 3 is more open to the interpretation of being a penalty than is Section 2, especially in the light of the fact that the Treasury reports for the fiscal year ending June 30, 1936, showed some revenues from the tax on dealers of $3,965, and from manufacturers $1,176, whereas but one purchaser paid the $200 transfer tax and filed his fingerprints and photograph. See N. Y. Times, November 6, 1936, at 52. This article quoted a member of the Department of Justice as saying: "We certainly don't expect gangsters to come forward to register their weapons and be fingerprinted, and a $200 tax is frankly prohibitive to private citizens . . . . The purpose of the act was to give us a check on all weapons being manufactured and to permit us to prosecute any person found in possession of an unregistered weapon."

The Supreme Court has noted, in sustaining the Harrison Anti Narcotics Act, that its provisions have produced substantial revenue and contain no regulatory matter beyond that necessary to administer the tax. Alston v. United States, 274 U. S. 289 (1927). Since Sections 3 and 4 of the Firearms Act seemingly produce little or no revenue, and their regulatory features are more apparent than Section 2, [Page 141] it is quite possible that the Court would refuse to sustain this portion of the Act.

[Recently the attorney general has asked Congress to require every owner of a rifle, shotgun, revolver or pistol to register his weapon with the bureau of internal revenue. A tax of one dollar would be payable for every firearm sold. The attorney general stated that this legislation would broaden the scope of the present Act and "would place a potent weapon against criminals in the hands of law-enforcement officers." See Chi. Daily News, May 4, 1937, at 4.]

ALVAH ROGERS, JR.