Time: Tue May 27 07:23:05 1997
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Date: Tue, 27 May 1997 07:17:03 -0700
To: (Recipient list suppressed)
From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: U.S. v. Constantine, 296 U.S. 287, 294 (1935)
Cc: <harold@halcyon.com>, <freedomh@spectra.net>, <libnw@dmi.net>

This is an  excerpt  from a  document  entitled "Second Amendment
Related Court Cases" at http://www.nysrpa.org/e&tcourt.htm:

[begin excerpt]

     This issue  was again  resolved adverse to the government in
United States  v. Constantine,  296 U.S.  287, 294, 56 S.Ct. 223,  <---
226, 80  L.Ed. 233  (1935). A  statute  provided  for  a  federal
assessment for  one who  violated a  state liquor  law. The Court
held that  it would  be invalid  "if, in  fact, its purpose is to
punish rather  than to  tax." Id. No federal jurisdiction existed
to enforce  alcohol Prohibition, because the Eighteenth Amendment
had been  repealed. Id. Similarly, no federal jurisdiction exists
to ban mere possession of machine guns, and the NFA provisions at
issue are  not supported  by the  tax power  to the  extent  they
enforce a  prohibition rather than taxation. As Constantine held,
"a penalty cannot be converted into a tax by so naming it ...[W]e
hold that  it is a penalty for the violation of State law, and as
such  beyond   the  limits  of  federal  power."  Id.  The  Court
explained: The condition of the imposition is the commission of a
crime. This,  together with  the amount  of  the  tax,  is  again
significant of  penal and  prohibitory  intent  rather  than  the
gathering of  revenue. Where,  in  addition  to  the  normal  and
ordinary tax  fixed by  law, an additional sum is to be collected
by reason  of conduct  of the  taxpayer violative of the law, and
this additional  sum is grossly disproportionate to the amount of
the normal  tax, the  conclusion must  be that  the purpose is to
impose a  penalty as  a  deterrent  and  punishment  of  unlawful
conduct. We  conclude that the indicia which the section exhibits
of an intent to prohibit and to punish violations of State law as
such are  too strong to be disregarded, remove all semblance of a
revenue act  and stamp  the sum  it exacts  as a penalty. In this
view the  statute is  a  clear  invasion  of  the  police  power,
inherent in  the States, reserved from the grant of powers to the
federal government  by the  Constitution. Id. at 295-96, 56 S.Ct.
at 227.  It is  well established that Congress may tax both legal
and illegal  activities. Marchetti v. United States, 390 U.S. 39,
44, 88 S.Ct. 697, 700, 19 L.Ed.2d 889 (1968).4 Gambling and other
acts which  may be  illegal under  state law  may be  taxed,  and
registration may  be required  to assist in collection of the tax
as long  as registration  information  is  not  shared  with  the
police, since  such sharing  would violate  the privilege against
self-incrimination. Id.  Registration  is  among  the  "ancillary
provisions  calculated   to  assure   their  [i.e.,   the  taxes]
collection."5 Id.  at 42,  88 S.Ct.  at 699. In contrast with the
federal taxation  and registration  of conduct made illegal under
state law, which the courts have upheld, the case at bar involves
federal  taxation   and  registration   requirements  which   the
government interprets  as repealed  by a  federal statute  making
post-1986  machine   guns  illegal.   In  short,  the  government
registers gamblers  and accepts their tax payments; it refuses to
accept registrations  and tax  payments for the making of machine
guns.

     The prosecution also asserts that "machine guns may still be
manufactured,   and    therefore   taxed,    under   18    U.S.C.
s922(o)(2)(A)."  Response   at  6.   Yet,  the   government   has
successfully argued  that that  provision allows manufacture only
for official government use. Farmer v. Higgins, 907 F.2d at 1042-
44. Manufacture  for government  use is  exempt from  any tax. 26
U.S.C. ss5852,  5953. Also,  this argument  fails to  address the
fact that  the United  States refuses  to register  any post-1986
machine  guns,   thereby  severing   any  tax   nexus  for   this
registration requirement, with which compliance is impossible. In
its motion  to reconsider,  the prosecution  reiterates that  the
government can tax an item or activity which is illegal. Yet, the
very framing  of this  proposition presupposes  that the activity
can and  will be  taxed. By  contrast, in  the case  at bar,  the
government  interprets   18  U.S.C.   s922(o)  to   prevent   the
registration and  taxation of  post-1986 machine  guns  made  for
private purposes under the National Firearms Act, 26 U.S.C. s5801
et seq.  The prosecution  relies on  Marchetti v.  United States,
supra, 390 U.S. at 44, 88 S.Ct. at 700, which held that reporting
requirements for taxation of illegal gambling may not violate the
privilege against self-incrimination. Yet, implicit in Marchetti,
is the  rationale that registration provisions are Constitutional
if and only if they assist in collection of revenue. As Marchetti
states:  The  taxes  are  supplemented  by  ancillary  provisions
calculated to  assure  their  collection.  In  particular,  s4412
requires those  liable for  the occupational tax to register each
year with  the director  of the  local internal revenue district.
Id. at  42, 88  S.Ct. at  699. Illegal  gamblers are  allowed  to
register and  pay the  tax. Alleged  makers of machine guns after
1986 are not. The prosecution also relies on dictum in a footnote
in Minor  v. United States, 396 U.S. 87, 90 S.Ct. 284, 24 L.Ed.2d
283 (1969),  which held  that a  reporting  requirement  by  drug
buyers does  not violate  a drug seller's privilege against self-
incrimination. The  prosecution, relying  on a  statement in  the
dissenting opinion  (396 U.S.  at 100,  90 S.Ct.  at 290), claims
that it  was impossible to pay the drug tax in that case. The Act
in question  required  dealers  to  register  with  the  Internal
Revenue Service  and pay a special occupational tax, and required
producers or  importers to  purchase stamps and affix them to the
package. Registered  dealers could secure order forms to transfer
drugs. Id. at 94, 90 S.Ct. at 287. While the Court focused on the
self-incrimination issue,  it noted that "there were some 400,000
registered dealers  under the  Harrison Narcotics Act in 1967 and
that registered  dealers can  readily get  order forms  issued in
blank." Id.  at 97,  90 S.Ct.  at 289.  As the Court noted, a tax
measure is valid even though it may deter an activity, revenue is
negligible, or the activity may be illegal. 396 U.S. at 98 n. 13,
90 S.Ct.  at 289  n. 13.6 Indeed, since being passed in 1934, the
National Firearms  Act has imposed occupational taxes, making and
transfer taxes  of $200  per firearm,  and stringent registration
requirements. Yet,  these taxation requirements did not amount to
a prohibition,  and registration  retained a  tax nexus.  In  any
event, the  interpretation of  the Constitutional  basis  of  the
specific statute  in this case is governed by Sonzinsky v. United
States, supra, 300 U.S. 506, 57 S.Ct. 554 and its progeny, not by
dictum in  a footnote  in an  unrelated narcotics case. Sonzinsky
held that  "the mere  registration provisions  ... are  obviously
supportable as  in aid  of revenue purpose." Id. at 513, 57 S.Ct.
at 555.  Haynes v. United States, supra, 390 U.S. at 87, 88 S.Ct.
at 725, repeated that the National Firearms Act is a tax measure,
and that registration is "calculated to assure [tax] collection."
Id. at  88-89, 88 S.Ct. at 725-26. The Act was described as a tax
measure again in United States v. Freed, 401 U.S. 601, 602-03, 91
S.Ct. 1112,  1114-15, 28  L.Ed.2d 356 (1971). The enactment of 18
U.S.C. s922(o)  in 1986  removed the Constitutional legitimacy of
registration as  an aid  to tax  collection. This  is because the
government  interprets   and   enforces   s922(o)   to   disallow
registration, and  refuses to collect the tax. Farmer v. Higgins,
907 F.2d 1041, 1042-44 (11th Cir.1990), cert. denied, ---U.S.---,
111 S.Ct. 753, 112 L.Ed.2d 773 (1991). Thus, s922(o) undercut the
Constitutional basis  of registration  which had  been  the  rule
since Sonzinsky.  Finally, the  prosecution quotes  an  enactment
passed in  1968 that the provisions of Title I of the Gun Control
Act shall  not modify  or  affect  the  National  Firearms  Act.7
However, the  1968 Congress  cannot bind  the Congress  of  1986,
which decided  to ban  transfer and  possession of  machine guns.
P.L.  99-308,   100  Stat.   453  (May  19,  1986).8  Further,  a
congressional declaration in 1968 does not solve a Constitutional
problem which  arose in  1986. The  ban enacted  in 1986, and the
government's refusal  to accept  registrations and  tax payments,
simply left  the registration requirements with no Constitutional
basis. It  is the  duty of  the judiciary  to declare  such  laws
unConstitutional. Marbury  v. Madison,  1 Cranch.  137, 176-77, 2
L.Ed. 60  (1803). In  sum, since  enactment of 18 U.S.C. s922(o),
the Secretary  has refused  to accept any tax payments to make or
transfer a  machine gun  made after  May 19, 1986, to approve any
such making  or transfer, or to register any such machine gun. As
applied to  machine guns  made and  possessed after May 19, 1986,
the registration  and other requirements of the National Firearms
Act, Chapter 53 of the Internal Revenue Code, no longer serve any
revenue   purpose,    and   are   impliedly   repealed   or   are
unConstitutional. Accordingly,  Counts 1(a)  and (b), 2, and 3 of
the superseding indictment are DISMISSED.

[end excerpt]

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