The Federalist 30:
Written by Alexander Hamilton
It has been observed that the national government ought to have the power to provide for the support of the military, which includes the cost of recruiting soldiers, building and equipping ships, and all other expenses related to military operations. But these are not the only things the government should have the power to tax for. It should also include funding for the government officials, paying off national debt, and any other expenses that need to be paid out of the national treasury. The government must have the power to collect taxes in some form.
It is necessary for a government to have the power to secure a steady and adequate amount of money, as much as the community will permit, in order to function properly. If the government does not have this power, it will have to either rely on stealing from the people, or the government will weaken and eventually fail.
- Discussion: What does a government “stealing form the people” look like? How is it different from taxation?
In the Ottoman Empire, the ruler has complete control over his subjects but cannot impose new taxes. As a result, governors with that power exploit the people, and the ruler takes money from them to meet his own needs and those of the state. In America, from a similar cause, the national government is dwindling into failure because it cannot raise enough money. It is clear that the people of both countries would benefit if the government had the power to raise enough money to meet the needs of the public.
The current Articles of Confederation aimed to give Congress the power to provide for the financial needs of the country. However, it has been implemented ineffectively. Under the Articles, Congress has the authority to determine financial needs and requests money from the states. While the states are obligated to fulfill these requests, in practice this obligation is often ignored. It will continue this way as long as the national revenues are dependent. on the states as intermediaries. This system has reduced us to this failed situation, to our own mortification and the happiness of our enemies.
The way to fix the current financial situation is to change the system that caused it. The only solution is to allow the national government to collect its own money through regular taxes, like in other properly run governments. No clever ideas can come up with another way to fix the problems caused by not having enough money in the public treasury.
- Discussion: Is taxation the only way for a government to raise sufficient funds for operation?
The smarter adversaries of the constitution admit that this reasoning is strong, but qualify this by noting a difference between internal and external taxation. The former they would leave to the state governments, the latter duties and tariffs they would cede to a federal government. This distinction, however, would violate the principle that power ought to be proportionate to its end—these external duties would not be enough and still leave the federal government dependent on state governments. Any man familiar with public credit can realize that even the grandest scale of external taxation power would not be enough even for current needs. The future demand may be even greater. Throughout history, the needs of a nation are usually at least equal to its resources.
To admit that debts may be provided for by state-based requisitions, is on the one hand to admit that this system cannot be depended upon, and on the other to depend upon it. Those who have studied this system know that it will weaken the country and cause fights between parts of the government and between the states. It’s not likely that this system will work better than it has in the past. It should be remembered that if less is required of the states, they will collect proportionately less reserves to answer the demand when requested. If one were to believe the dissenters, they would be led to conclude that there is some fixed point in the economy where all the needs of society of society will be filled and any further spending is unnecessary. How would a government, half-funded, fulfill its purposes? The government will lack energy and stability, and it will be hard for people to have confidence in it.
Let’s imagine what would happen under the system in the very first war we enter as a nation. We will assume, for argument’s sake, that the revenue arising from import duties is enough to meet the public debt. Then, war breaks out. What would a government do in such an emergency? Understanding that it cannot depend on requesting money from the states and unable to get new resources, wouldn’t it divert funds appropriated for national debt instead to national defense? Its not easy to see how this could be avoided, and if undertaken, it is evident that it would destroy public credit at the very moment that credit became essential to public safety. In modern war, even rich countries need to borrow money. A country so poor as ours would feel this need even more. Few, however, would lend money to a government with no reliable way to pay its debts. The loans it might receive would be limited and burdensome.
It may seem that even if the national government had the power to tax, there would still not be enough money to fund the government during a war. However, there are two reasons not to worry about this. The first is that with the national government able to tax, all the resources of the country will be used to support the union. The second is that any money the government needs that it does not have can more easily be borrowed.
The power of taxation would enable the national government to borrow to meet its needs. Foreigners, as well as citizens, could then feel confident it could meet its debts. To depend upon a government that itself must depend on thirteen other governments to meet its contracts, however, would require some naiveté, which is rarely had in financial transactions.
Those who think that everything will always be perfect in America may not see the importance of this, but for those who understand that there will be challenges, it is important to be prepared.
The Federalist 31:
Written by Alexander Hamilton
In any kind of discussion, there are basic truths or first principles on which all other ideas depend. These truths have an internal logic that commands the mind’s agreement. If they do not produce this effect, it may be due to a problem with the senses, or the influence of strong emotions, interests, or prejudices. Some examples of these axioms in geometry are that the whole is greater than its part, equal things are equal to each other, two straight lines cannot enclose a space, and all right angles are equal to each other. Similarly, in ethics and politics, some first principles are that there cannot be an effect without a cause, the means should be proportionate to the end, every power should be appropriate for its purpose, and that there should be no limit on a power that is meant to achieve a purpose that is itself limitless. There are other truths, which if not true first principles, are so logical, obvious and in line with common sense that they demand agreement from a clear and unbiased mind.
The ideas and concepts studied in geometry are so disconnected from emotion that it is easy for people to accept not only the simpler principles of the subject, but also the more complex and ideas that don’t cohere with our intuition. For example, the idea that finite matter can be divided infinitely, even down to the smallest particle, is accepted by mathematicians, though this is just as counterintuitive as many religious mysteries which often come under heavy scrutiny.
Morality and politics are far less agreeable. To a point, this is good. Caution is necessary to prevent against moral error. But this disagreeability may be carried too far, and may degenerate to stubborn unreasonableness. Though we cannot pretend to have the same level of certainty in morality and politics as in mathematics, some men can still have better or worse claims. The confusion is more frequently in the emotions of the reasoner than in the subject. Men too often yield to their biases and entangle themselves in words.
How else—assuming objectors to the constitution are sincere—that such an obvious need for the general power of taxation should encounter challenges? Though these positions have been stated elsewhere, we may discuss them here again. They are as follows:
A government should have every power needed to fulfill its responsibilities and execute the tasks entrusted to it. The only constraints on this power should be the public good and the collective will of the people.
Because national defense and securing the peace from foreign or domestic violence is existential, the government’s power to provide for these duties should be limitless, but for the actual needs at hand and what resources are feasibly available.
As money is the essential means by which the country’s needs may be addressed, the power to generate revenue should be considered an inherent part of the government’s ability to respond to those needs.
Theory and experience demonstrate that the power to generate revenue is ineffective when wielded over states collectively. Hence, the federal government must be granted the full and direct power to tax in the normal ways.
Some might agree that the national government ought to have the power to tax just based on these arguments. But those who oppose this idea in the proposed new constitution don’t agree and continue to fight against it. To better understand their point of view, let’s examine the arguments they use to argue against it.
The counterargument against unrestricted federal power of taxation posits that such authority could eventually eclipse state-level taxing abilities, thereby undermining the state governments. Critics argue that states also have important roles and should have secure avenues for revenue. They assert that while the needs of the union are critical, they are not necessarily more important than the needs of individual states, both of which contribute to the well-being of the populace. The concern is that an unfettered federal taxation power would eventually drain states of the financial means necessary for their governance. This could make states wholly dependent on the goodwill or mercy of the federal government. The federal government, having the authority to override state laws, could even abolish state taxes on the grounds that they interfere with national objectives. Thus, by degrees, all the resources of taxation may become subject to federal taxation to the eventual exclusion and destruction of state governments.
- Discussion: How do you think the relationship between state and federal taxation has borne out since critics leveled these charges?
This reasoning sometimes hinges on supposing that the federal government will usurp powers not granted to it, and at other times that it will operate only within its constitutionally defined powers. Only the latter can be fairly considered; assuming that the federal government will overstep its boundaries leads to speculative and unproductive debates. This kind of conjecture can generate an endless train of possible dangers, resulting in skepticism and indecision. Concerns about usurpation should focus on the structure and composition of the government, not the extent of its powers. The state governments are granted complete sovereignty by their original constitutions. If security against usurpation by the state exists because of the constitution and democratic checks and balances, then the same logic should be applied to the federal government.
Encroachments on power could come from both the federal government and the state governments. In a conflict over power, the side with more public support is likely to prevail. State governments, being closer to the people, would likely wield greater influence and hence be more apt to encroach upon the powers of the federal government than vice versa. But it’s hard to know for sure what will happen. It’s best to focus on the powers that are listed in the constitution. The people will ultimately be in charge and it’s hoped that they will make sure that the state and federal governments have equal power. With all this information, it should be easy to discard the objections to an indefinite power of taxation in the United States.
The Federalist 32:
Written by Alexander Hamilton
I don’t think that there would be any real danger to the state governments if the national government had the power to control how much money they raise. I believe that the sense of the people, the risk of provoking state governments, and a need of local administrations for local purposes would prevent such an oppressive power. That said, I am willing to concede that individual states should possess an independent ability to tax for their own wants. In making this concession, I affirm that—besides tariffs—they would absolutely retain that authority under this proposed constitution. Any attempt of the national government to stop that would be considered a violent assumption of power.
Consolidating the states into one national power would imply a subordination of the parts to the general will. But that is not the plan, the plan is only a partial union—besides those powers exclusively delegated to the federal government, the state governments would clearly retain all the rights of sovereignty which they already had. The reduction in state sovereignty would only exist in three cases (1) When the Constitution expressly grants exclusive authority to the union, for example, jurisdiction over Washington D.C.; (2) when the Constitution grants a power to the federal government while explicitly prohibit states from exercising that same power, for example, with tariffs; and (3) when the powers granted to the federal government would be contradictory if exercised by the states, for example, the rule of naturalizing citizens must be uniform between states, and thus cannot be given to individual states.
The power to impose taxes on items—besides tariffs—is an authority that both the United States and individual states share. This is because there is no language in the Constitution that explicitly makes this power exclusive to the Union nor that denies the states this power. In fact, the restriction on taxing imports and exports, by omission of other limits, implies that the states do have the power to tax other things. This is called a “negative pregnant” by lawyers. Any other view is unnecessary, dangerous, and obviously could not have been the intention of this language.
Both state and federal governments have the right to impose taxes. Even if both choose to tax the same item, this doesn’t mean one is constitutionally forbidden from doing so; it just might not be practical. Policy disagreements can happen, but they don’t make one level of government’s power to tax invalid. For that to happen, the Constitution would have to clearly state that only one has that authority, and in the case of taxation, it doesn’t. So, both the state and the federal government maintain their power to tax, even if they have to navigate some challenges to do so effectively.
The Constitution intentionally leaves certain powers with the states, unless it explicitly transfers them to the federal government. This dual authority is a logical outcome of dividing power between state and federal levels. The Constitution makes it clear when it wants to restrict state powers by inserting clauses that explicitly deny states certain authorities. The tenth section of the first article is an example, where it specifically limits state powers. This phrasing supports the idea that states retain all powers not expressly given to the federal government, and denies any claim to the contrary.
- Discussion: Hamilton describes a “negative pregnant,” in this case meaning the assumption of rights (to the states) not expressly forbidden by the Constitution. How credible do you think the fears of the colonists were to imagine that this may not be respected? Why?
The Federalist 33:
Written by Alexander Hamilton
The remaining arguments against the taxation provisions in the U.S. Constitution hinge on two clauses. The first, from the eighth section of the first article, gives Congress the power to make all necessary and proper laws to execute its powers. The second, from the sixth article, establishes that the U.S. Constitution, federal laws, and treaties are the “supreme law of the land,” overriding any state laws to the contrary. These clauses are often cited to question the balance of taxation powers between the federal and state governments.
The two clauses in question have faced severe criticism, painted as instruments to annihilate local governments and personal freedoms. Despite the intense outcry, these clauses essentially restate what is already implicitly true: creating a federal government with defined powers naturally gives it the authority to carry out those powers. The clauses merely clarify the government’s ability to enact laws to execute its roles and establish federal law as the highest law. The vehement opposition to these parts of the Constitution seems less justified when one considers that they simply make explicit what would have been implicitly true anyway. Thus, even if these clauses were removed, the function and operation of the federal government would remain essentially the same. The emotional intensity of the arguments against these clauses is hard to justify given their basic, declarative nature.
A power is essentially the capacity to perform a specific action. In the context of a legislative power, this means the ability to enact laws. Specifically, if we talk about the power of laying and collecting taxes, it falls under legislative power. This power allows the government to make laws that specify how taxes will be laid and collected. To execute this power effectively, it requires laws that are “necessary and proper,” serving as the means to fulfill this specific legislative function. In essence, the power to do something and the means to execute that power are interconnected, especially in a legislative context where laws both define and enable that power.
The key point here is that the criticized provision in the constitution simply reaffirms an obvious truth: if the national legislature is granted the power to tax, it must also have the authority to pass all necessary and proper laws to effectively execute that power. In essence, the “sweeping clause” is not introducing any new, potentially dangerous authority; it is explicitly stating what should be implicitly understood—that to carry out the powers vested in it, the legislature can enact appropriate laws. While I have focused on the power of taxation, the same rationale applies to all other powers delineated in the constitution. The clause in question—often referred to derogatorily as the “sweeping clause”—is just an overarching statement allowing the national legislature to pass laws necessary for executing its vested powers. Any issues should not be with the clause itself, which may at worst be redundant, but rather with the specific powers that are granted, as those are what the clause acts upon. The provision is essentially harmless, serving more as a clarification than as a grant of unchecked power.
One may wonder why this clause was then introduced? The inclusion of this clause is likely an act of prudence, designed to head off any future attempts to limit or undermine the union’s granted authorities. The convention probably anticipated that one of the biggest threats to the national well-being would come from state governments attempting to weaken the federal structure. Given this, they might have seen it as essential to leave no room for ambiguity on such a crucial matter. The very outcry against this clause demonstrates its necessity. Therefore, the wisdom of including such a cautionary clause is confirmed by the controversy it has generated, which shows that there are indeed forces willing to challenge the authorities vested in the union.
It may be asked: who is to judge the necessity and appropriateness of laws for executing federal powers? The answer is twofold: First, this question is just as relevant whether the powers are explicitly granted or merely implied by a declaratory clause. Second, the initial judgment lies with the federal government itself, while the final say belongs to its constituents—the people. If the federal government oversteps its bounds and abuses its powers, it’s up to the people to refer to their agreed-upon standards and take corrective actions as deemed necessary and prudent. The legitimacy of any law is ultimately determined by the specific powers upon which it is based. For instance, if the federal government were to try to change a state’s inheritance laws, it would be clear that it had overstepped its jurisdiction. Similarly, if the federal government tried to nullify a state’s land tax, citing interference with federal taxation authority, it would clearly be encroaching on a jurisdiction that the Constitution assumes to be within the state’s purview. Any confusion or doubt regarding these jurisdictional limits is likely the result of deliberate attempts to muddy the waters by those opposed to the proposed constitutional framework. Their efforts aim to cloud straightforward truths, complicating what should be a clear understanding of the division of powers.
The assertion that the laws of the union will be the “supreme law of the land” isn’t as controversial as some make it out to be. Laws, by their very nature, entail a form of supremacy; they establish rules that those under their jurisdiction are obliged to follow. This is a fundamental aspect of any political association. When individuals form a society, the laws of that society govern their conduct. The same principle applies when multiple political entities come together to form a larger political society, like a federal government. The laws enacted by this larger society, consistent with the powers granted to it by its constitution, must logically be supreme over its constituent parts. However, this doesn’t mean that any action taken by the federal government becomes supreme law. Only those laws that are enacted pursuant to its constitutional powers hold that status. Any actions that exceed those powers are not laws but usurpations, and they should be treated as such. The clause declaring the supremacy of federal laws is, therefore, a straightforward declaration of an inherent truth in a federal system. It’s worth noting that the clause explicitly limits this supremacy to laws made pursuant to the Constitution. This cautionary detail, though it would be understood even if not explicitly stated, underscores the framers’ intent to circumscribe federal power strictly within its constitutional boundaries.
In a federal system under the proposed Constitution, a law enacted by the federal government to lay a tax would be supreme and couldn’t legally be obstructed by state laws. However, a federal law that negates or interferes with a state’s ability to collect its own tax—unless that tax is on imports or exports—would be an overreach, a usurpation of powers not granted by the Constitution. If both the federal and state governments levy taxes on the same object, and this dual taxation makes collection difficult or precarious, the issue would not stem from a lack of power on either side. Rather, it would result from imprudent use of power by either or both governments. Ideally, mutual interests should guide both levels of government to coordinate their actions to avoid such inconveniences. Individual states would still possess considerable taxing authority under the proposed Constitution. They would maintain the autonomy to raise revenue through all forms of taxation, except for duties on imports and exports. This shared authority in taxation is presented as a compromise, avoiding the complete subordination of state taxing powers to federal authority. The next paper will argue that this is the only feasible alternative, maintaining a balance of power in the federal system.
The Federalist 34:
Written by Alexander Hamilton
I think it is clear from my last article that the states will have the same power as the nation when it comes to taxation, except for taxes on imports. Since this still leaves the greatest portion of the resources for the states, there can be no argument that they would not have the means to be self-sufficient and free from external control. The vastness of this fiscal field will become more evident as we later detail how little of the public expenses would actually fall under the responsibility of state governments.
It is argued that it is impossible to have two authorities with the same power, but this is clearly wrong when there is counterfactual proof: in the Roman Republic, there were two separate legislatures for a long time with opposite interests, the Patrician, and the Plebeian. There may be many arguments that allowing each the power to annul or repeal the acts of the other is unwise, but it would be crazy to dismiss its existence. These two legislatures co-existed for ages as the Roman republic rose to greatness.
In our constitution’s situation, there is no conflict like the one mentioned in the example. Neither side has the power to cancel out the other’s actions. In reality, it’s not likely to cause any problems because the needs of the states will probably narrow in a short amount of time, and the federal government will likely find it more convenient to stay away from the things the states would want to do.
To make a more informed decision on this issue, we need to look at the difference between the objects that would need a federal provision for taxation, and the things that would need a state provision. We will see that the former are unlimited, and the latter are much more limited. We must keep in mind that we must consider not just the present, but also the future, and we cannot safely limit the government’s ability to provide for future needs as these needs will be unpredictable. Because the emergencies of the future can be limitless in end, it would be a mistake to limit the capacity to provide for those contingencies. While it might be possible to make a reasonable guess on how much money will be needed to cover current needs and to maintain current services, bounding them there would leave the government unable to protect the community against any future problems, such as war or civil unrest. One may also assert an ability to judge how much could be allocated to future dangers, but if we ask those people to show their numbers we will find those estimates vague and uncertain. We also cannot merely form such judgments against internal unrest, but as a commercial people we must support a navy, naval wars, and all sorts of contingencies that baffle arithmetic.
Admitting that we ought to try the novel and absurd experiment of tying the hands of government from offensive war, we certainly ought not to disable its defense from other nation’s aggression. Europe’s turmoil may come here, we are not out of reach. Even if their chaos subsides, what security can we have from other forces disturbing our peace? Remember, peace or war is not always out option; no matter how moderate or unambitious we may be, we cannot expect the same from other nations. Who would have thought that after the last war the tired France and Britain would already look so hostiley upon each other. To judge from the history of mankind, the destructive passions of war reign more powerfully in the human heart than mild sentiments of peace, and that to model our political system on speculations of the latter would be a weak proposition.
- Discussion: What do you think of Hamilton’s isolationist stance?
What are the main costs for any government? Why do some European countries have so much debt? The answer is simple, war and rebellion. To protect a nation, there are certain institutions that must be supported, like the executive, legislative, and judicial branches, their related departments, and programs that help agriculture and manufacturing. These costs are small compared to those of defending the nation.
In Great Britain a small portion (1/15) of the income of the nation is used for monarchy-related expenses. The rest (14/15) is used to pay off debts from past wars, and to maintain fleets and armies. Some might argue that you can’t compare the costs of running a monarchy to the costs of running a republic. But it’s worth noting that a wealthy kingdom is likely to spend a lot more on its internal operations than a republic should. So, if you adjust for these differences, the overall proportion of spending might still be a good way to think about it.
We’ve racked up a big debt from just one war. If we consider that wars and conflicts are fairly common events between nations, it’s clear that federal spending will always be way higher than what states spend. It’s true that many individual states have a lot of debt too, mostly due to the recent war. But if we adopt the new system of government being proposed, those state debts will eventually be paid off. After that, states will only really need money to cover basic government functions. Even if we account for unexpected costs, the total amount each state would need should be well under a million dollars.
When creating a long-term government system, it’s best to plan for ongoing expenses rather than short-term ones, which would amount to state governments needing about a million dollars annually for their routine operations. The financial needs of the entire country—the federal government—could be much higher and are difficult to even estimate. By the logic proposed, how could. we argue that state governments ought to command the power to raise funds in excess of a million dollars? Doing so would further take funds out of the hands of the union, providing for public welfare of the union, in order to put them in the hands of those state governments who have no just use for those excess funds.
If the convention had tried to divide up revenue sources between the federal and state governments based on their respective needs, it would’ve been hard to find a source that was just right for both. Any source would either be too much or too little—either insufficient for current needs or excessive for future ones. If we were to separate revenue by type, like external and internal taxes, the states would end up with a disproportionate share of the money. Roughly speaking, states would get two-thirds of all possible revenue but would only need to cover a small fraction (from one-tenth to one-twentieth) of total expenses. Meanwhile, the federal government would only get one-third of the community’s resources, but would have to pay for the vast majority (from nine-tenths to nineteen-twentieths) of the expenses. Even if we were to leave property taxes exclusively to the states, there’d still be a mismatch between the money coming in and the needs to be met. The states would have one-third of the community’s resources to cover, at most, one-tenth of its expenses. No matter how you slice it, giving states a dedicated fund would not be adequate to pay off their existing debts. States would still have to rely on the federal government to help them meet their financial obligations.
- Discussion: Can you creatively imagine other solutions refining the split between state and federal taxation that you believe would be preferable?
The previous discussion supports the idea that both federal and state governments should have the ability to tax. This is better than making state taxing power completely subordinate to that of the federal government; any attempt to neatly divide revenue sources between the two levels of government would have ended up harming the interests of the country as a whole just to maintain state power. The convention decided that this shared power to tax was a better option than completely sidelining state authority. This arrangement allows the federal government to have a broad power to tax while also ensuring states can generate enough revenue to meet their own needs. There are few other ways to view the important subject of taxation that we will next consider.
The Federalist 35:
Written by Alexander Hamilton
Before we examine other objections to an indefinite power of taxation in the union, I want to make one comment. If the government only had the power to collect taxes on certain objects, then it would create two problems: the first would be that certain industries would be unfairly oppressed, and the second that the taxes would be spread unevenly between different states and also between citizens of the same state.
Suppose that the federal power of taxation was confined to just import tariffs; it is obvious that the government would way overtax these objects because they had no other way to raise funds. Some people doubt this, thinking that higher taxes would limit people’s spending and encourage domestic manufacturing. But all extremes are bad. Excess import tariffs create smuggling, which is always detrimental to the lawful trader and to revenue generation itself. High duties can give domestic manufactures an unfair monopolistic advantage, making other segments of society dependent on them. High duties distort the market and make it less efficient, and they oppress the merchant who often have to pay out of pocket because passing the costs on would make them uncompetitive.
It is true that more often than not, the costs are paid by the consumers. Because consumers across various states end up paying these duties, the revenue should go into a shared fund that benefits all states rather than just the states where the goods are imported. But it is not equitable for this to be the sole source of funds. For instance, when the duties are paid by the merchant, the states that import more goods would bear a heavier tax burden, making it unfair to their citizens. This inequality would increase between states proportionally with the tax. Furthermore, states with strong manufacturing sectors would consume fewer imported goods and thus contribute less to a duty-based tax system, creating more inequality as non-manufacturing states pay a disproportionate amount of taxes. States would not be contributing in proportion to their abilities. To make the system more equitable would require excise taxes. New York should be more deeply interested in these situations because we are an importing state, and is less likely than other states to become a manufacturing state quickly. We would suffer doubly from restraining the union’s taxation powers to just imports.
As long as the dangers of extreme taxes are respected, the government might also find that their own tax revenue would be impacted if import taxes were too high and guard against this extreme. This might be the case if other avenues are open to them, but if closed, hope might cause them to experiment with higher import duties lured by false hope that it could solve their fiscal challenges. Initial success in raising revenue through higher duties might lead to incorrect conclusions about the efficacy of the approach. It would then take a long. time to correct these false opinions. Necessity, especially in politics, can lead to false reasoning and flawed policies. Even if the government does not resort to excessive import taxes, inequalities among states would exist due to the other causes previously discussed. Let us now examine more objections.
- Discussion: What do you make of Hamilton’s discussion of hope forming bad policies. Where in modern government policy may this have been exemplified?
One frequently repeated objection is that the House of Representatives is not large enough to represent all classes of citizens and the interests of the entire community. That sounds like a good idea, but when you take a closer look, it is not realistic and not necessary. Later, we will look at whether the House of Representatives has enough people, but for now, let’s look at the subject at hand.
The idea of an actual representation of all classes of people is impractical. Unless it were expressly provided for in the Constitution that each different occupation should send one or more members, it would never otherwise take place in practice. Mechanics and manufactures will always be inclined, with a few exceptions, to give their votes to merchants before people of their own profession because merchants are seen as more capable advocates of their interests. They know enough that life has not given them the natural talents suited for deliberative assemblies, and that merchants would best oppose others that were unfriendly to the manufacturing trades. We may thus consider merchants as the natural representatives of all types of people.
When it comes to the educated professions, not much needs to be said: they don’t form a separate group in society; and depending on their situation and skills, they are equally trusted and chosen by each other and by other parts of the population.
Only landowners remain, and I take this bloc to be perfectly united. No tax can be laid on land that will not affect both those large and small landowners. No tax can be imposed on land that won’t hurt the owner of many acres as much as the owner of one acre. So all land owners have a shared interest in keeping taxes as low as possible. Even if we imagined a difference between the rich landowner and the middling farmer, what reason is there to conclude that the former would stand a better chance of being elected to the national legislature than the latter? If we look at our own senate and assembly, we see that moderate landowners prevail in both. When two candidates are equally qualified, people will vote for those people they trust, regardless of how much money they have.
It is said that all types of citizens should have representatives in the government so that their needs are met. But we know that this won’t happen if people are allowed to vote freely. In this situation, the government would mainly be made up of landowners, merchants, and professionals. However, there is no real danger that the needs of different citizens won’t be understood by these three groups. Landowners will know what is good and bad for land, merchants will understand the needs of mechanics and manufacturers, and educated professionals will be unbiased and promote whatever is best for the community.
- Discussion: How do you view Hamilton’s discussion on the representation of different classes over the preceding few paragraphs?
Considering the temporary feelings or attitudes that may be prevalent in certain areas of society, is it not more likely that someone who has done extensive research and gathered lots of information will be better able to judge them than someone whose observations are limited to their friends and neighbors? It makes sense that a person running for public office, who depends on the votes of the people to stay in power, will make sure to understand their attitudes and preferences and consider them in their decisions. This dependence and the need to be held accountable by the laws they help create form strong bonds between elected officials and their constituents.
- Discussion: What makes bonds between politicians and their constituents stronger? Weaker?
No part of the government requires as much extensive information and knowledge as taxation. The man who understands these principles best will be least likely to resort to oppressive expedients or to sacrifice a particular class of citizens for revenue. It can be shown that the most productive method of financing as also the least burdensome. To tax people wisely, one must understand the people’s habits, how they think, and their country’s resources. Everyone can decide for themselves who is most qualified for this job.
The Federalist 36:
Written by Alexander Hamilton
We have so far seen that politicians will usually be landowners, merchants, and professionals. Even though there are exceptions to this rule, they are not in sufficient number to influence the general makeup of government. There are strong minds from all walks of life who are able to overcome their disadvantages and make a difference. The door should be open to everyone. We can hope to see examples of this in federal and state governments, but these are rare cases and do not change the overall conclusion.
Different trades and occupations, like the carpenter, blacksmith, and linen manufacturer, have rival interests, just like different sectors of the economy. Unless the legislature were unreasonably larger, it is impossible to recognize every individual sector’s interest. But I will no longer dwell on the matter as objections to this point are not well-defined enough to be worth addressing.
There is another, better defined objection that merits our attention. It has been said that the national government won’t be able to tax properly because it won’t have enough knowledge of local conditions and its laws might interfere with state laws. This lack-of-knowledge problem seems entirely untrue. When a state legislature needs to know details about one of its counties, they get it from the people in that county. The same thing can happen in the national government. Don’t we assume that the men who will be sent there will be smart enough to communicate that information? When it comes to taxation, it’s not about knowing every mountain, river, path, and highway in each state. It’s about knowing the state’s situation and resources, what it makes and buys, its wealth and industry, and so on.
Governments in general, even those that are chosen by the people, often have one person or a group of people in charge of their money. They come up with the plans for taxes, which are later approved by the leader or law-makers. People who are curious and educated are the best qualified people to pick which things should be taxed, indicating that they must have some kind of knowledge of local circumstances required for taxation.
Taxes can be divided into two groups: direct taxes and indirect taxes. People usually only object to direct taxes, but it’s hard to understand why they would object to indirect taxes (i.e. taxes on goods and services). The knowledge needed to implement these taxes is either self-evident based on the nature of the taxed article or easily obtainable, especially from well-informed people in the mercantile class. The circumstances affecting the taxation of a particular article are likely to be similar across different states, making it easier to implement such taxes uniformly. The main concern is to avoid taxing articles that have already been taxed by individual states. This information could easily be obtained from the states’ legal codes or representatives.
At first, it may seem like the objection has more foundation when applied to real estate. However, if we look closer, we can see that this isn’t true. Land taxes are usually set in two ways: either by permanent or periodic valuations, or by discretionary assessments. Either way, the actual execution of tax assessments, which requires knowledge of local details, would be carried out by commissioners or assessors. These individuals could be either elected by the people or appointed by the government. The law’s role is to establish the framework within which these commissioners or assessors operate. This includes naming them or prescribing the manner of their election or appointment, defining their qualifications, and outlining their powers and duties. In all this, what is there than cannot just as well be performed by the national legislature as by the state legislature? Either body would be dealing with general principles, while the execution and attention to local details would be left to those appointed for that purpose.
There is an easy way to look at this problem that will be satisfactory for everyone: the national government can use the same methods and processes that each state uses for these kinds of taxation.
Let’s remember that the proportion of taxes levied on each state is not to be arbitrarily decided by the national legislature. Instead, it is to be determined by the population of each state, as outlined in the second section of the first article of the U.S. Constitution. An actual census or enumeration of the population serves as the basis for this proportion, making it a data-driven process. This mechanism is intended to prevent partiality or oppression, as the tax burden is allocated based on objective numbers rather than legislative discretion. In addition to this precaution, there is an additional provision that “all duties imposts and excises, shall be uniform throughout the United States.”
It has been rightly observed that if the federal government finds it inconvenient to exercise the power of internal taxation, it can rely on requests for funds from the states instead. People then ask why not just rely on requisitions to begin with? There are two reasons for this. First, it is impossible to tell ahead of time if the power of taxation will be useful or not—it might be. Second, when the states know that the union can get money without them, they will be more likely to respond to such requisitions.
When it comes to the tax laws of the nation and its states, there can be no conflict between them. It is possible to avoid any interference between the policies of each. The best way to do this is to not do anything that either side had first started. Since neither can control the other, both will benefit from this agreement. As states settle their debts and streamline their expenses, the likelihood of conflicts with federal taxation will decrease. States can rely on simpler forms of taxation, like a small land tax, to meet their financial needs, further reducing the potential for conflict with federal taxation.
There have been a lot of worries and fears raised about this power of internal taxation. People are afraid that they will have to pay twice as much because of two sets of tax collectors and poll taxes that are seen as too harsh and unfair, but it’s all a political trick.
There are two cases in which it would not be possible for the government to have two sets of officers. The first is when the government has exclusive control over taxes, which applies to those on imports. The second is when the subject has not been regulated by state laws. In other cases, the government will likely avoid the same subject as the state or use the state officers and regulations to collect the taxes. This is the best solution since it will save money and avoid making anyone angry. Even if the plan does have some bad effects, it is still a workable solution.
- Discussion: How do you view Hamilton’s perception of the duplication of taxation powers?
Despite some arguments, the idea that a system of undue influence should not be assumed to exist. Such a presumption is not a valid basis for argument. That said, if the federal government were actually trying to exert undue influence over the states, it would be more effective for it to use state officers for federal tasks and increase their pay. By using and rewarding state officers, the federal government would redirect state influence toward itself. However, such concerns are harmful and should not cloud the discussion.
With regards to double taxation, the answer is obvious. The financial needs of the federal government must be met somehow. If these needs are met by federal taxation, then state governments won’t need to levy additional taxes for the same purpose. Whether the taxes are collected by the state or the federal government, the total tax burden on the community remains the same. The federal government is better positioned to levy certain kinds of taxes, like duties on imports, which are more convenient and less burdensome for the public. If the federal government takes on the responsibility of internal taxation, it will be more careful in choosing what to tax, aiming to minimize public dissatisfaction. Federal taxation would be more likely to target luxury items and wealth, thereby reducing the tax burden on the less wealthy and more numerous classes of society. It’s beneficial when the government’s interest in maintaining its power aligns with fair taxation, protecting the less wealthy from undue burden.
- Discussion: What do you draw from Hamilton’s discussion of the objects of federal taxation?
I am against poll taxes, and I would be sad if they became part of the national government. But does it follow, that because there is a power to lay them, that they will actually be laid? Every state in the union has this power, and yet many don’t actually use them. Are state governments to be stigmatized as tyrannies because they possess this power? If they are not, then how would you lay such a charge this against a federal government? Despite not liking poll taxes, I still think the federal government should have this power. In certain emergencies, they may become necessary and the government ought to have this option, not the least because there are very few goods in this country that would be productive sources of taxation.
I have been examining the powers that would be given to the federal government, focusing on those that contribute to its energy and efficiency. Other powers, not discussed in this section, will be examined later to provide a more complete view of the subject. I think that after looking at the Constitution, most people will see that the objections to it are not valid. After even further investigation of it, sincere and honest people will find that it is the right choice to adopt. We as a nation can set an example for the world if we have the wisdom and courage to do so.
The Easy Federalist 
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