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McCray v. United States (1904)

Last Updated: 2006

This Supreme Court case addresses the scope of Congress’s taxing and spending powers. More specifically, it examines the ability of Congress to use its taxing authority for regulatory purposes. Taxation is commonly thought of as a means of raising revenue. However, governments frequently use tax laws to encourage and discourage particular activities. The facts in McCray v. United States (1904) demonstrate this governmental practice.

Oleomargarine was developed as a substitute for butter in the nineteenth century. It was not a serious competitor to butter in the marketplace until it was artificially colored yellow. In response to this competition, the dairy industry pressed for protection. The Oleomargarine Act of 1886 was passed by Congress and amended in 1902. This act taxed uncolored oleomargarine at one quarter of a cent per pound and taxed artificially colored margarine at 10 cents per pound. William F. McCray, a licensed dealer, purchased fifty pounds of colored margarine for resale, but paid the uncolored margarine tax per pound. He was assessed a fine and appealed his case all the way to the Supreme Court. McCray argued that the tax was an unconstitutional attempt to regulate an activity that was reserved to the states. The government argued that the oleomargarine tax was an excise tax permissible under Article I, Section 8, with the only constitutional limitation being that the tax must apply uniformly across the country.

The Supreme Court opinion, written by Justice Edward Douglas White, quickly recognized Congress’s constitutional authority to impose excise taxes. The Court then addressed the question of whether there should be a judicial inquiry into the motives of Congress when it exercises lawful powers. The Court stated that the remedy for a perceived abuse of a lawful exercise of power lies with the people, not the judiciary. The Court then discussed the destructive power of taxes, citing ”McCulloch v. Maryland” (1819). The Court acknowledged that the oleomargarine tax was most likely levied to restrict or even destroy the manufacturing of artificially colored oleomargarine. However, the Court declined to intervene in this case because a fundamental right was not at stake. The Court concluded by stating that a free government could prohibit the production of artificially colored oleomargarine without violating any fundamental rights.

McCray is an important case because it validated Congress’s ability to use its taxing power to achieve ends that normally would require police powers. This expansion of congressional power altered the distribution of power between the national and state governments. The national government is able to indirectly exercise police power, something once believed to be reserved to the states.

SEE ALSO: Darby Lumber Company v. United StatesMcCulloch v. MarylandPerez v. United StatesTaxing and Spending PowerTenth AmendmentUnited States v. Butler


Craig R. Ducat, Constitutional Interpretation (Belmont, CA: Wadsworth/Thompson, 2004); Lee Epstein and Thomas G. Walker, Constitutional Law for a Changing America: Institutional Powers and Constraints, 4th ed. (Washington, DC: CQ Press, 2001); and Kermit L. Hall, ed., The Oxford Companion to the Supreme Court of the United States (New York: Oxford University Press, 1992).