Helvering v. Davis

Helvering v. Davis, 301 U.S. 619 (1937), was a decision by the U.S. Supreme Court that held that Social Security was constitutionally permissible as an exercise of the federal power to spend for the general welfare and so did not contravene the Tenth Amendment of the U.S. Constitution.
The Court's 7–2 decision defended the constitutionality of the Social Security Act of 1935 by requiring only welfare spending to be for the common benefit, as distinguished from some mere local purpose. It affirmed a District Court decree that held that the tax upon employees was not properly at issue and that the tax upon employers was constitutional.
Facts.
A shareholder of the Edison Electric Illuminating Company brought a derivative action to restrain the company from making payments and deductions required by the Social Security Act of 1935 on the grounds that it was unconstitutional. He sought an injunction and a declaration that the Act was void.
Decision.
The Supreme Court's decision in the case was written by Justice Benjamin N. Cardozo and supported the right of Congress to interpret the "general welfare" clause in the Constitution.
Joining the decision was Justice Harlan Stone, who during the drafting of the legislation had advised Secretary Frances Perkins that the constitutionality of Social Security could be based upon "The taxing power of the Federal Government, my dear; the taxing power is sufficient for everything you want and need."