CONSTITUTIONAL LAW - OLD AGE PENSIONS - TITLES II AND VIII OF SOCIAL SECURITY ACT - POWER TO SPEND FOR THE GENERAL WELFARE

In a case decided May 24, 1937, Titles II and VIII of the Social Security Act were challenged. Title VIII lays a tax on employers, which reaches a maximum in 1949 of 3 per cent of the wages paid by the employer, and also a tax on employees measured by a similar percentage of the wages they earn, and which is withheld and paid by the employer. Neither tax applies to certain kinds of occupations: agricultural labor, domestic service, governmental service, nor to wages earned by persons over sixty-five years of age. Title II provides for payment to persons over sixty-five who have worked the requisite time, a monthly pension, paid from an Old-Age Reserve Account created in the Treasury by appropriations by Congress. A stockholder of an employer-corporation sought to enjoin the corporation from paying either of the levies under Title VIII, on the basis that the levies were not a proper exercise of the tax power, and that Title VIII was inseparably tied up with the old age pensions of Title II, which was alleged to be beyond the powers of the Federal Government and an encroachment on state matters. Held, that the tax on employers is an excise or duty upon the relation of employment, that it is not arbitrary because of the exceptions, and that Title II in providing for old age pensions is a valid exercise of the power to spend for the general welfare. Helvering v. Davis, (U.S. 1937) 81 L. Ed. 804