McCray v. United States

Background

The dispute involved manufacturers of oleomargarine and acts of Congress passed in 1886 and amended in 1902 that defined “butter” and “oleomargarine,” set packaging and licensing rules, and raised the excise tax on oleomargarine from two cents to ten cents per pound, with a small reduced rate if the oleomargarine was free from artificial coloration that made it look like butter. The case arose when a manufacturer challenged the tax and related enforcement on constitutional grounds, claiming loss of property, improper federal interference with state powers, and unfair discrimination against oleomargarine.

Reasoning

The Court first construed the statute and concluded that oleomargarine colored by the use of an artificially colored ingredient was not covered by the tax exception and therefore was subject to the ten-cent rate. Turning to the constitutional claims, the Court held that Congress’ power to impose excise taxes is broad, that courts will not invalidate a tax merely because it may have been unwise, burdensome, or had harmful effects, and that motives of Congress are not a proper ground for judicial nullification. The Court relied on earlier rulings about the taxing power and previous cases distinguishing colored oleomargarine from natural butter, and it rejected arguments that the tax confiscated property or unlawfully usurped state police powers.

Real world impact

The ruling lets the federal government collect the higher tax on artificially colored oleomargarine and supports enforcement against manufacturers who produce oleo that looks like butter. Manufacturers using artificially colored ingredients will face the higher excise, and similar federal taxes on food products remain within Congress’s broad taxing authority.

Dissents or concurrances

Three Justices (the Chief Justice, Mr. Justice Brown, and Mr. Justice Peckham) filed a dissent, indicating there was not unanimous agreement with the Court’s conclusions.