Steward Machine Co. v. Davis

Steward Machine Co. v. Davis, 301 U.S. 548 (1937), argued 8–9 Apr. 1937, decided 24 May 1937 by vote of 5 to 4; Cardozo for the Court, Butler, McReynolds, Sutherland, and Van Devanter in dissent. One of the centerpieces of the New Deal was the Social Security Act of 1935. Among other things, this law established mechanisms to provide for unemployment compensation and old age benefits.

In Steward Machine Company v. Davis the unemployment compensation feature of the law was upheld 5 to 4, and in the companion case of Helvering v. Davis the old age benefits provisions were sustained by a more comfortable 7‐to‐2 majority. Justice Benjamin Cardozo wrote both opinions.

In Steward, the Court held that the payroll tax on employers that generated the revenue to fund Social Security's unemployment compensation was constitutionally permissible under Article I, section 8, which grants Congress the power “to lay and collect taxes … to … provide … for the General Welfare of the United States.” In contrast to the majority opinion in United States v. Butler (1936)—decided prior to Justice Owen *Roberts's switch to the liberal side—Cardozo and the Court's majority in Steward refused to read the Tenth Amendment as a restriction on Congress's taxing and spending power.

See also Taxing and Spending Clause.

John W. Johnson