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The Social Security Act taxed employers with eight or more employees based on their salaries. The proceeds went into the General Treasury. If a taxpayer contributed to a state fund, he received credit toward the federal tax. Employers could receive a credit up to 90% of these taxes if they also paid into the state unemployment fund if the state fund was certified by the Secretary of the Treasury as meeting minimum criteria with respect to financial stability and accountability. Between 1929 and 1936, unemployment skyrocketed in the United States, and the states couldn't give the appropriate help to those in need. Steward Machine Co. (P) paid a tax in accordance with the statute and then filed a claim to recover the payment, asserting that the statute was unconstitutional. The lower courts upheld the act. P appealed.

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