Congress has no general power to police vice; that power belongs instead to the states. On the other hand, Congress can regulate, even prohibit, commerce across state lines, and Congress’s power to tax is very broad indeed. Congress has long used taxes to discourage transactions it could not prohibit. In this case, a bookie complained of provisions of the Revenue Act of 1951 obliging those who took wagers to register with the federal government so that they might be taxed on that business. Where state law prohibited gambling, those registering risked state prosecution, while those refraining risked federal prosecution. The law made no exception for bookies who operated only locally. When Kahriger was prosecuted for failing to register, he argued successfully that the charges be dropped because the law amounted to abuse by Congress of its taxing power to achieve what the Constitution otherwise foreclosed. He relied heavily on U.S. v. Constantine (1935). In that case, the Court had concluded that a similar tax on liquor vendors was really a penalty beyond the scope of federal power after repeal of the Eighteenth Amendment and could not be sustained just because it took the form of a tax. By 1953, however, the Court had grown more receptive to federal solutions for national problems. The decision below in Kahriger’s favor was reversed and the wagering excise provisions were upheld. Constantine was distinguished on the grounds that the tax in that case applied only to a business prohibited by state law, whereas the tax in this case applied to wagering without regard to its legality under state law. The Court preferred to follow its line of cases upholding federal taxes on the businesses of issuing private bank notes, Veazie Bank v. Fenno (1869), and selling margarine, McCray v. United States (1904), marijuana, United States v. Sanchez (1950), narcotics, United States v. Doremus (1919), or firearms, Sonzinsky v. United States (1937). As the Court now saw things, evidence that Congress intended to discourage a certain activity that it could not regulate does not make unconstitutional a tax proper in its form.
Kahriger also argued that compulsory registration violated his privilege against self-incrimination, but the Court took the view that registration amounted only to a declaration of intent to take wagers in the future, rather than a confession to taking them in the past. In Marchetti v. United States (1968), the Supreme Court changed its mind on this point, striking down the wagering tax because it coerced confession in violation of the Fifth Amendment.
JOHN PAUL JONES
References and Further Reading
Cases and Statutes Cited
See also Federalization of Criminal Law; Self- Incrimination (V): Historical Background