United States v. Sanchez

• Decision Date: 13 November 1950
• Docket Number: No. 81,81
• Citation: 71 S.Ct. 108,95 L.Ed. 47,340 U.S. 42
• Parties: UNITED STATES v. SANCHEZ et al
• Court: U.S. Supreme Court

340 U.S. 42

71 S.Ct. 108

95 L.Ed. 47

UNITED STATES

v SANCHEZ et al.

No. 81.

Argued Oct. 20, 1950.

Decided Nov. 13, 1950.

Mr. Philip Elman, Washington, D.C., for appellant.

No appearance for appellees.

Mr. Justice CLARKdelivered the opinion of the Court.

This is a direct appeal, 28 U.S.C. § 1252,28 U.S.C.A. § 1252, from dismissal by the District Court of a suit for recovery of $8,701.65 in taxes and interest alleged to be due under § 7(a)(2) of the Marihuana Tax, Act, 50 Stat. 551, now § 2590(a)(2) of the Internal Revenue Code. 26 U.S.C. § 2590(a)(2),26 U.S.C.A. § 2590(a)(2).In their motion to dismiss, which was granted without opinion, defendants attacked the constitutionality of this subsection on the ground that it levied a penalty, not a tax.The validity of this levy is the issue here.

In enacting the Marihuana Tax Act, the Congress had two objectives: 'First, the development of a plan of taxation which will raise revenue and at the same time render extremely difficult the acquisition of marihauna by persons who desire it for illicit uses and, second, the development of an adequate means of publicizing dealings in marihuana in order to tax and control the traffic effectively.'S. Rep. No. 900, 75th Cong., 1st Sess., p. 3.To the same effect, seeH.R. Rep. No. 792, 75th Cong., 1st Sess., p. 2.

Pursuant to these objective, § 3230 of the Code imposes a special tax ranging from $1 to $24 on 'every person who imports, manufactures, produces, compounds, sells, deals in, depenses, prescribes, administers, or gives away marihuana'.For purposes of administration, § 3231 requires such persons to register at the time of the payment of the tax with the Collector of the District in which their businesses are located.The Code then makes it unlawful—with certain exceptions not pertinent here—for any person to transfer marihuana except in pursuance of a written order of the transferee on a blank form issued by the Secretary of the Treasury.§ 2591.Section 2590 requiries the transferee at the time he applies for the order form to pay a tax on such transfer of $1 per ounce or fraction thereof if he has paid the special tax and registered, § 2590(a)(1), or $100 per ounce or fraction thereof if he has not paid the special tax and registered.§ 2590(a)(2).The transferor is also made liable for the tax so imposed, in the event the transfer is made without an order form and without the payment of the tax by the transferee.§ 2590(b).Defendants in this case are transferors.

It is obvious that § 2590, by imposing a severe burden on transfers to unregistered persons, implements the congressional purpose of restricting traffic in marihuana to accepted industrial and medicinal channels.Hence the attack here rests on the regulatory character and prohibitive burden of the section as well as the penal nature of the imposition.But despite the regulatory effect and the close resemblance to a penalty, it does not follow that the levy is invalid.

First.It is beyond serious question that a tax does not cease to be valid merely because it regulates, discourages, or even definitely deters the activities taxed.Sonzinsky v. United States, 1937, 300 U.S. 506, 513—514, 57 S.Ct. 554, 555—556, 81 L.Ed. 772.The principle applies even though the revenue obtained is obviously negligible, Sonzinsky v. United States, supra, or the revenue purpose of the tax may be secondary, Hampton & Co. v. United States, 1928, 276 U.S. 394, 48 S.Ct. 348, 72 L.Ed. 624.Nor does a tax statute necessarily fall because it touches on activities which Congress might not otherwise regulate.As was pointed out in Magnano Co. v. Hamilton, 1934, 292 U.S. 40, 47, 54 S.Ct. 599, 603, 78 L.Ed. 1109'From the beginning of our government, the courts have sustained taxes although imposed with the collateral intent of effecting ulterior ends which, considered apart, were beyond the constitutional power of the lawmakers to realize by legislation directly addressed to their accomplishment.'

These principles are controlling here.The tax in question is a legitimate exercise of the taxing power despite its collateral regulatory purpose and effect.

Second.The tax levied by § 2590(a)(2) is not conditioned...