The U.S. Supreme Court case Bailey, Collector of Internal Revenue, et al. v. George, Trading and Doing Business as Vivian Cotton Mills, et al., 1921 revolved around the issue of whether a tax on child labor was constitutional or not. The court ruled in favor of George (Vivian Cotton Mills), stating that the Child Labor Tax Law passed by Congress in 1919 was unconstitutional because it exceeded Congress's taxation powers under Article I Section 8 of the Constitution and violated states' rights to regulate their own labor practices under the Tenth Amendment. The law imposed a ten percent excise tax on net profits from companies employing children under certain ages or for excessive hours depending upon age groups defined within the law itself. This decision reinforced limits on federal power over state affairs during this era.

In the dissenting opinion for Bailey v. George, Justice Holmes argued that the Child Labor Tax Law was constitutional and should be upheld. He believed that Congress had a right to impose taxes with regulatory effects as long as they did not violate any specific prohibitions in the Constitution. In his view, it wasn't appropriate for courts to scrutinize or second-guess Congressional motives behind such laws; rather, their role was simply to determine if these laws were within Congress's power under the Constitution. According to him, since taxation is an enumerated power of Congress under Article I Section 8 of the U.S Constitution and there are no explicit restrictions on this power regarding child labor regulation in particular, he saw no reason why this law shouldn't stand.