Lewis v. United States (348 U.S. 419)/Opinion of the Court

by Sherman Minton

United States Supreme Court

348 U.S. 419

Lewis  v.  United States (348 U.S. 419)

 Argued: Feb. 3, 4, 1955. --- Decided: March 14, 1955

An information was filed in the Municipal Court of the District of Columbia charging the petitioner with violation of 26 U.S.C. § 3290, 26 U.S.C.A. § 3290, in that he engaged in the business of accepting wagers without paying the occupational tax imposed by that section. The Municipal Court sustained a motion to dismiss the information. The Municipal Court of Appeals for the District reversed, 100 A.2d 40, and the Circuit Court of Appeals affirmed the Municipal Court of Appeals. 94 U.S.App.D.C. 205, 214 F.2d 853. We granted certiorari. 348 U.S. 810, 75 S.Ct. 60.

The questions presented in this case are: Does the Act, as applied to the petitioner in the District of Columbia, constitute a valid exercise of the taxing power or is it a penalty under the guise of a tax? Secondly, does it violate the Fifth Amendment's prohibition as to compulsory self-incrimination? Thirdly, does it contravene the Fourth Amendment's ban against unreasonable search and seizure? The first two questions were categorically answered in the negative, and the validity and constitutionality of the Act upheld by us in United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754; the third question is not substantially different from the second and is also controlled by Kahriger. The only material factual difference between that case and the instant case is that in Kahriger the violation occurred in a State, namely, Pennsylvania, while in the instant case the violation is charged to have taken place in the District of Columbia.

The statute, 26 U.S.C. § 3290, 26 U.S.C.A. § 3290, provides:

'A special tax of $50 per year shall be paid by each person who is liable for tax under subchapter A or who is engaged in receiving wagers for or on behalf of any person so liable.'

Another section, 26 U.S.C. § 3271, 26 U.S.C.A. § 3271, reads:

'Payment of tax-(a) Condition precedent to doing business.

'No person shall be engaged in or carry on any trade or business mentioned in this chapter until he has paid a special tax therefor in the manner provided in this chapter.' Subchapter A, referred to in § 3290, provides in § 3285:

'(a) Wagers.

'There shall be imposed on wagers, as defined in subsection (b), an excise tax equal to 10 per centum of the amount thereof.'

These provisions must be read together, and when we do, it seems clear that payment of the special $50 tax is to be made prior to engaging in the business of accepting wagers.

We held in Kahriger that this statute was a constitutional exercise of the taxing power and was not a penalty under the guise of a tax. 345 U.S. at pages 24-32, 73 S.Ct. at pages 511-515. It is argued that that case involved wagering in a State, where such activity is not a violation of federal law, that the instant case arises in the District of Columbia, where wagering is by federal law a crime, D.C.Code, 1951, § 22-1501 et seq., and that this statute as applied to petitioner in the District of Columbia is a penalty in the guise of a tax. The short answer to this argument is that this Court has long held that the Federal Government may tax what it also forbids. United States v. Stafoff, 260 U.S. 477, 43 S.Ct. 197, 67 L.Ed. 358.

Secondly, it is contended by petitioner that the Act in question is unconstitutional because compliance compels self-incrimination in contravention of the Fifth Amendment. The Fifth Amendment provides that one cannot be compelled, in a criminal case, to be a witness against himself. It is a shield that prevents one from being convicted out of his own mouth by anything short of voluntary statements.

Petitioner maintains that the taxes imposed are retrospective in application. It is argued that he must be liable for the tax under subchapter A in the sense that he must have already wagered before he is required to take out the occupational tax, and that to require him to do so compels admission that he has gambled. We do not so read the statute. The Act does not mean one must first have made a wager as defined in subchapter A and therefore incurred liability to pay the tax levied therein before liability for the occupational tax attaches. The Act is wholly prospective and by its terms did not become applicable until November 1, 1951, more than ten days after its enactment on October 20, 1951. See compiler's note to 26 U.S.C. § 3285, 26 U.S.C.A. § 3285. The statute simply designates a class that is liable to pay the ten percent tax when a wager or wagers are made. Payment of the $50 tax here under consideration is a registration fee that must be paid before engaging in the business of wagering.

We said in Kahriger, supra, 345 U.S. at pages 32-33, 73 S.Ct. at page 515: 'Under the registration provisions of the wagering tax, appellee is not compelled to confess to acts already committed, he is merely informed by the statute that in order to engage in the business of wagering in the future he must fulfill certain conditions.' The condition here important was that petitioner must first pay the $50 tax, but that did not give him any license to engage in an unlawful business. License Tax Cases, 5 Wall. 462, 471, 18 L.Ed. 497. It only warned that if he proposed to carry on this particular business he must pay the tax.

If petitioner desires to engage in an unlawful business, he does so only on his own volition. The fact that he may elect to pay the tax and make the prescribed disclosures required by the Act is a matter of his choice. There is nothing compulsory about it, and, consequently, there is nothing violative of the Fifth Amendment. If he does not pay the occupational tax, proceeds to accept wagers, and is prosecuted therefor, as in this case, he cannot be compelled to testify and may claim his privilege. The only compulsion under the Act is that requiring the decision which would-be gamblers must make at the threshold. They may have to give up gambling, but there is no constitutional right to gamble. If they elect to wager, though it be unlawful, they must pay the tax.

And, finally, the petitioner argues that to require him to pay the tax and exhibit the stamp in his place of business, as required by 26 U.S.C. § 3293 of the Act, 26 U.S.C.A. § 3293, is to furnish probable cause for the issuance of a search warrant. This is just another facet of the Fifth Amendment argument, but the ready answer is that the petitioner has no stamp. If he does not purchase a stamp even though he wagers, which is this case, it is difficult to see how such failure would give probable cause for the issuance of a search warrant. His complaint is that if he had one he might get in trouble. Since petitioner is without a stamp, he is not in a position to raise the question as to what might happen to him if he had one.

The judgment is affirmed.

Affirmed.

Mr. Justice FRANKFURTER, dissenting.

Notes