CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIRST CIRCUIT
No. 401 Argued: December 9, 10, 1935 --- Decided: January 6, 1936
2. A tax, in the general understanding and in the strict constitutional sense, is an exaction for the support of Government;
17. The plan of the Agricultural Adjustment Act is to increase the prices of certain farm products for the farmer by decreasing the quantities produced; the decrease is to be attained by making payments of money to farmers who, under agreements with the Secretary of Agriculture, reduce their acreage and crops, and the money for this purpose is exacted, as a tax, from those who first process the commodities.
Held:
(1) The Act invades the reserved powers of the States. P. 68.
(2) Regulation and control of agricultural production are beyond the powers delegated to the Federal Government. P. 68.
(3) The tax, the appropriation of the funds raised, and the direction for their disbursement, are but parts of the plan -- the means to an unconstitutional end. P. 68.
(4) The power of taxation, which is expressly granted to Congress, may be adopted as a means to carry into operation another power also expressly granted, but not to effectuate an end which is
not within the scope of the Constitution. P. 69.
(5) The regulation of the farmer's activities under the statute, though in form subject to his own will, is, in fact, coercion through economic pressure; his right of choice is illusory. P. 70.
(13) Congress, being without power to impose the contested exaction, could not lawfully ratify the acts of an executive officer in assessing it. P. 78.
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SUPREME COURT OF THE UNITED STATES
Syllabus extract
UNITED STATES v. REORGANIZED CF&I FABRICATORS OF UTAH, INC., et al.
certiorari to the united states court of appeals for the tenth circuit
No. 95-325. Argued March 25, 1996 -- Decided June 20, 1996
Held:
1. The "tax" under §4971(a) was not entitled to seventh priority as an "excise tax" under §507(a)(7)(E), but instead is, for bankruptcy purposes, a penalty to be dealt with as an ordinary, unsecured claim. Pp. 4-13.
(b) That history reveals that characterizations in the Internal Revenue Code are not dispositive in the bankruptcy context. In every case in which the Court considered whether a particular exaction called a "tax" in the statute creating it was a tax for bankruptcy purposes, the Court looked behind the label and rested its answer directly on the operation of the provision. See, e.g., United States v. New York, 315 U.S. 510, 514-517.
. . . The Government also seeks to rely on a statement from the legislative history that all taxes "generally considered or expressly treated as excises are covered by" §507(a)(7)(E), but §4971 does not call its exaction an excise tax, and the suggestion that taxes treated as excises are "excise tax[es]" begs the question whether the exaction is a tax to begin with. There is no basis, therefore, for avoiding the functional examination that the Court ordinarily employs. Pp. 6-10.
(c) The Court's cases in this area look to whether the purpose of an exaction is support of the government or punishment for an unlawful act. If the concept of a penalty means anything, it means punishment for an unlawful act or omission, and that is what this exaction is. The §4971 exaction is imposed for violating a separate federal statute requiring the funding of pension plans, and thus has an obviously penal character. Pp. 11-12.
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EXAC'TION, n. The act of demanding with authority, and compelling to pay or yield; authoritative demand; a levying or drawing from by force; a driving to compliance; as the exaction of tribute or of obedience.
1. Extortion; a wresting from one unjustly; the taking advantage of one's necessities, to compel him to pay illegal or exorbitant tribute, fees or rewards.
Take away your exactions from my people. Ezek.45.
2. That which is exacted; tribute, fees, rewards or contributions demanded or levied with severity or injustice. Kings may be enriched by exactions, but their power is weakened by the consequent disaffection of their subjects.
Webster’s First edition 1828
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1. The act of demanding with authority, and compelling to pay or yield; compulsion to give or furnish; a levying by force; a driving to compliance; as, the exaction to tribute or of obedience; hence, extortion.
Take away your exactions from my people. Ezek. xlv. 9.
Daily new exactions are devised. Shak.
Illegal exactions of sheriffs and officials. Bancroft.
2. That which is exacted; a severe tribute; a fee, reward, or contribution, demanded or levied with severity or injustice. Daniel.
Webster’s 1913
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exaction
• noun formal 1 the action of exacting something, especially a payment. 2 a sum of money exacted.
exact
• verb 1 demand and obtain (something) from someone.
Compact Oxford Dictionary
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Exaction
noun Definition: 1. act of demanding and obtaining something: the act of forcing somebody to give something, especially payment
2. unfair demand: an unfair or excessive demand for something, especially money ( formal )
3. payment obtained by force: a sum of money that has been forcibly demanded and obtained
( formal ) .
Encarta
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Exaction
1 a : the act or process of exacting b : EXTORTION
2 : something exacted; especially : a fee, reward, or contribution demanded or levied with severity or injustice
Exacting
Function: transitive verb
Etymology: Middle English, to require as payment, from Latin exactus, past participle of exigere to drive out, demand, measure, from ex- + agere to drive -- more at AGENT
1 : to call for forcibly or urgently and obtain
<from them has been exacted the ultimate sacrifice -- D. D. Eisenhower>
2 : to call for as necessary or desirable
synonym see DEMAND
Merriam Webster
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exaction
The act of demanding or levying by force or authority: "exaction of tribute";
"exaction of various dues and fees."
Ultra Lingua Online dictionary
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exacted, exacting
1. To demand (payment, etc) from them.
Thesaurus: extort, force, compel, wrest, extract.
Form: exact something from someone (usually)
Form: exact something of someone
2. To insist on (a right, etc).
Thesaurus: demand, insist upon, require.
Derivative: exacting
adj
Making difficult or excessive demands.
Thesaurus: strict, demanding, tyrannical, rigid, severe, harsh, unsparing, tough, painstaking, stringent, arduous, difficult, laborious, taxing, toilsome.
Derivative: exaction
The act of demanding payment, or the payment demanded.
Illegal demands for money; extortion.
AllWords.com
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Taxation. Recovery of Illegal Exaction. Voluntary or Coercive Payments
The Yale Law Journal, Vol. 38, No. 2 (Dec., 1928), pp. 266-267 doi:10.2307/789955
http://links.jstor.org/sici?sici=0044-0094(192812)38%3A2%3C266%3ATROIEV%3E2.0.CO%3B2-P
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tax (n., vt., adj.): “Taxes are what we pay for civilized
society.” 156
These gems of wisdom by Mr. Justice Holmes (and
from a dissenting opinion, at that) have been carved in stone and
placed above the main entrance to the Internal Revenue Service
(“IRS”) Headquarters building, 1111 Constitution Avenue,
Washington, D.C. 157
Few if any attorneys or judges know or care
about the legal precedent established in Mr. Chief Justice Taft’s
majority opinion in the case (which lost much of its precedential
value in 1946, when the Philippine Islands, of which Taft had
previously served as Governor General, became independent of
American sovereignty). 158
Though the inscription carved on the stone molding continues to impart
dignity and direction to the IRS’s ongoing efforts to battle the barbarians,
it has utterly failed to make paying one’s taxes a pleasurable experience. 159.
156. Compañía General de Tabacos de Filipinas v. Collector of Internal Revenue, 275
U.S. 87, 100 (1927) (Holmes, J., dissenting).
157. Id.; IRS v. Citizens: There is No Excuse for Reported Government Violence
Against American Taxpayers, NEWSDAY (New York), May 4, 1998, at A30; Internal
Revenue Service, Governmental Liaison Contacts (listing headquarters address for
Internal Revenue Service), available at
http://www.irs.gov/govt/liaisons/article/0,,id=133086,00.html (last visited Feb. 5, 2006).
158. Compañía General de Tabacos de Filipinas, 275 U.S. at 87; Joseph R. L. Sterne,
Editorial, A Century-Old Lesson in Nation-Building, BALTIMORE SUN, Sept. 5, 2003, at
13A (discussing Taft’s professional history and role in the Philippines).
159. Cf. Dru Sefton, Enthusiasts Don’t Mind Having to Pay Taxes, NEW ORLEANS
TIMES PICAYUNE, Mar. 24, 2002, available at
http://www.responsiblewealth.org/press/rwnews/2002/tax_fairness_new_orleans.html
(accessed February 5, 2006) (reporting on rare tax enthusiasts happy to pay taxes in
exchange for government services).
Devil’s Dictionary of Taxation, http://www.hbtlj.org/v06p1/v06p1Ryeskyar.pdf