These seven essays form the fourth major division of The Federalist Papers.
Having shown that the Union is essential (Nos. 1-14), that the Articles of Confederation are fatally defective (Nos. 15-22), and that an energetic federal government must possess full military powers (Nos. 23-29), Hamilton now turns to the indispensable means of supporting every national object: a robust and independent power of taxation.`
Money, he observes, is “the vital principle of the body politic.”
Without a reliable source of revenue the government cannot defend the nation, pay its debts, or perform any of its essential functions.
The old system of state quotas and requisitions had already proven a complete failure.
The new Constitution therefore grants the federal government a general power to tax, while carefully preserving concurrent state taxing authority (with only narrow exceptions).
Hamilton systematically answers the principal objections:
● Nos. 30–31 establish the necessity of an unlimited federal taxing power.
● Nos. 32–34 carefully define the concurrent jurisdiction of the Union and the States and explain the true meaning of the Necessary and Proper and Supremacy Clauses.
● Nos. 35–36 address the practical forms of taxation and, most memorably – in No. 35 – a brilliant analysis of the natural composition of the House of Representatives.
Taken together, Federalist 30–36 demonstrate that a strong federal power of taxation is not a threat to liberty or to the States—it is the only reliable foundation for both.
Federalist 30: The Federal Government Must Be Well-Funded
THE FEDERAL GOVERNMENT WILL POSSESS THE POWER of providing for the support of the national forces, and with it the obligation to make expenditures for raising troops, building and equipping fleets, and any other expense in any way connected with military arrangements and operations.
The Federal taxing power must also embrace a provision for the support of the operation of the national civil list, the payment of the national debts contracted, and in general for all those matters which will call for disbursements out of the national treasury.
In one shape or another, a general power of taxation must be interwoven into the frame of the Federal government.
If revenue is deficient, one of two evils must ensue: either the People must be subjected to continual plunder to supply the public wants, or the government must sink into a fatal atrophy and perish.
Federal Sources of Revenue Are Essential
Money is the vital principle of the body politic.
It sustains its life and motion, which in turn enables it to perform its most essential functions.
Thus an indispensable ingredient in every constitution must be the complete power to procure a regular and adequate supply of money so far as the resources of the community will permit.
If revenue is deficient, one of two evils must ensue: either the People must be subjected to continual plunder to supply the public wants, or the government must sink into a fatal atrophy and perish.
The first evil is visible in the Ottoman empire – based in Turkey –where the sovereign – though in other respects absolute master of the lives and fortunes of his subjects – has no right to impose a new tax.
To fund the government, the sovereign permits the leaders of provinces to pillage the people without mercy, and then squeezes out of these leaders the sums he needs to satisfy his own exigencies and those of the state.
Likewise in America, under the Articles of Confederation, the national government gradually dwindled into a state of decay and near annihilation.
No one can doubt the happiness of the People in both countries would be promoted by competent authorities in the proper hands to secure the revenues which the necessities of the public might require.
It is true that the national government existing prior to ratification of the Constitution possessed an unlimited power of providing for its pecuniary wants.
But that government proceeded on an erroneous principle that entirely frustrated this intention. Congress was authorized to ascertain and call for any sums of money it deemed necessary to the service of the United States.
Its requisitions – if conformable to the rule of apportionment – were in every constitutional sense obligatory upon the States.
In addition, the States had no right to question the propriety of the demand.
But the States thereafter exercised discretion – contrary to the tenor of the Articles of Confederation – in devising the ways and means of furnishing the sums demanded.
Although this discretion was almost never avowedly claimed, in practice it was constantly exercised. The untoward consequences of this system caused mortification to ourselves and triumph to our enemies, as I explained in Federalist 15 through 22.
So long as the revenues of the Federal government depend on the intermediate agency of State governments, nothing would change.
The only remedy was to replace the fallacious system of quotas and requisitions.
The Federal government must be allowed to raise its own revenues by the ordinary methods of taxation authorized in every well-ordered constitution of civil government.
No human ingenuity can identify any other expedient to rescue us from the inconveniences and embarrassments naturally resulting from defective supplies to the public treasury.
Sources of Federal Revenue Must Be Both Internal and External
The more intelligent adversaries of the new Constitution admit the force of this reasoning, but they qualify their admission by a distinction between what they call internal and external taxation.
External taxation – duties on imported articles – would be conceded to the Federal government.
The remaining taxing power – internal taxation – would repose with the individual State governments.
The distinction between internal and external taxes violates the maxim of good sense and sound policy which dictates every power ought to be in proportion to its object.
Limiting the Federal government to external taxation would leave it in a kind of tutelage to the State governments, and be inconsistent with every idea of vigor or efficiency.
No one can pretend that commercial imposts would equal the present and future exigencies of the United States.
Taking into the account the existing foreign and domestic debt, as well as the Federal establishments – which everyone agrees are necessary – we cannot flatter ourselves that external taxes alone would even suffice the current Federal necessities.
As future necessities of the Federal government admit not of calculation or limitation, the power of making provision for them as they arise must be equally unconfined, since the history of mankind establishes the necessities of a nation will normally equal or exceed its resources at every stage of its existence.
Relying Only on External Taxes Gives States Excessive Control
If we limit the revenue of the Federal government to external taxes only, we will necessarily require it to rely upon State governments for any shortfall.
The Federal government would again depend upon the failed system of requisitions from State governments.
The inevitable tendency of such an approach would enfeeble the United States and sow the seeds of discord and contention between the Federal and State governments, and between the States themselves.
The proponents of limiting the Federal taxing power to external taxes presumably believe there is a point in the economy of national affairs where one could safely stop and say: We have given the Federal government all it needs to supply its wants and thereby advance the public happiness of the People, and all beyond this is unworthy of our care or anxiety.
But how can a government that is always half-supplied and necessitous fulfill its purposes of providing for the security, advancing the prosperity, and supporting the reputation of the United States?
Can it ever possess energy and stability, dignity and credit, or confidence at home and respectability abroad?
Its administration would be nothing else than a succession of temporizing, impotent and disgraceful expedients.
It would make a frequent sacrifice of its engagements to immediate necessity.
It could not undertake or execute any liberal or enlarged plans of public good.
And what would happen to such a government when it became engaged in its first war?
Prior to hostilities, it is fair to assume its revenues – limited to impost duties – would be sufficient to keep current payments on the public debt and to maintain peace establishments.
We will next assume the government would have learned from experience the futility of requisitions from the States.
If the Federal government is limited in its power to tax – and thus unable by its own authority to lay hold of fresh resources – would not the government, fueled by considerations of national danger, be driven to the expedient of diverting the funds already appropriated from their proper objects to the defense of the United States?
The Federal power of creating new funds upon new objects of taxation would enable the Federal government to borrow as far as its necessities might require.
It would be difficult to avoid a step of this kind.
Once taken, it would prove the destruction of the public credit.
One must be deluded to imagine that at such a crisis the nation could dispense with credit.
It would be the extreme of infatuation. In the modern system of war, even the wealthiest nations are obliged to have recourse to large loans.
A smaller country must feel this necessity in a much stronger degree.
But who would lend to a government that prefaced its overtures for borrowing with an act demonstrating the unsteadiness of its revenue stream for repayment?
What loans it might be able to procure would be as limited in their extent as burdensome in their conditions?
They would be made upon the same principles that usurers commonly lend to bankrupt and fraudulent debtors: with a sparing hand but at enormous premiums.
Due to the presently limited resources of the United States, it might seem impossible to avoid diverting established funds in the case of war, notwithstanding the Federal government’s unrestrained power of taxation.
But two considerations will serve to quiet all apprehension on this head.
First, I am sure the full resources of the community will be brought into activity for the benefit of the United States.
Second, any deficiency can without difficulty be supplied by loans.
The Federal power of creating new funds upon new objects of taxation would enable the Federal government to borrow as far as its necessities might require.
Foreigners – as well as the citizens of the United States – could then reasonably repose confidence in its engagements.
But the situation would be reversed if the Federal government were dependent upon the State governments for the means to fulfill its contracts.
To believe otherwise would require a degree of credulity not often found in the pecuniary transactions of mankind, and little reconcilable with the usual sharp-sightedness of avarice.
We Must Act on the Assumption that the United States Will Suffer Its Fair Share of Reversals
The preceding reflections may have trifling weight with individuals who hope to see realized in the United States the halcyon scenes of a poetic or fabulous age.
But to those who believe we are likely to experience a common portion of the vicissitudes and calamities which have fallen to the lot of other nations, my reflections are entitled to serious attention.
We must behold the actual situation of their country with painful solicitude, and deprecate the evils which ambition or revenge might, with too much facility, inflict upon it.
Hamilton
Federalist 31: A General Federal Power of Taxation Is Required
Certain Primary Truths Are Indisputable
IN DISQUISITIONS OF EVERY KIND, certain primary truths contain internal evidence commanding the assent of the mind antecedent to all reflection.
Upon these all subsequent reasonings must depend.
Of this nature are the maxims in geometry, such as the whole is greater than a part, things equal to the same are equal to each other, two straight lines cannot enclose a space, and all right angles are equal to one another.
The objects of geometrical inquiry are so far removed from those pursuits which stir and animate the unruly passions of the human heart that mankind has easily adopted even those abstruse paradoxes which seem at variance with the natural conceptions the mind would entertain in the absence of knowledge.
For instance, the infinite divisibility of finite matter – extending even to the minutest atom – is a point agreed among scientists though it is no more comprehensible to common sense than any of those mysteries of religion so industriously assaulted by nonbelievers.
Of the same nature are the accepted maxims of in ethics and politics, including there can be no effect without a cause, the means ought to be proportioned to the end, every power ought to be commensurate with its object, and there should be no limitation of a power destined to effect a purpose which is itself incapable of limitation.
And besides these are other truths in the science of ethics and politics which – though not ranking in the class of axioms – are direct inferences from the first principles.
They are so obvious in themselves – and so agreeable to the natural and unsophisticated dictates of common sense – that they demand the assent of a sound and unbiased mind with a degree of force and conviction almost equally irresistible.
I do not pretend the principles of moral and political knowledge generally have the same degree of certainty as in mathematics. But when applied to the conduct of individuals in particular situations, these principles have more claim to truth than we are disposed to admit. If these principles seem obscure to an individual, much more often it is the fault of the passions and prejudices of the reasoner than in the subject being studied.
Where these truths produce not these effects, the organs of perception must suffer from some defect or disorder, or be subject to the influence of some strong interest, passion, or prejudice.
In the sciences of morals and politics, of course, humans are far less governable.
To a certain degree, it is right and useful that this should be the case. Caution and investigation are a necessary armor against error and imposition.
But intractability can be carried too far, and degenerate into obstinacy, perverseness, or disingenuity.
I do not pretend the principles of moral and political knowledge generally have the same degree of certainty as in mathematics.
But when applied to the conduct of individuals in particular situations, these principles have more claim to truth than we are disposed to admit.
If these principles seem obscure to an individual, much more often it is the fault of the passions and prejudices of the reasoner than in the subject being studied.
On too many occasions, individuals decline to give their own thoughts and knowledge fair play. Instead, they yield these to some untoward bias, and thus entangle themselves in words and subtleties.
The Federal Government Requires a General Power of Taxation
The natural human tendencies just described most likely explain why some oppose a general power of taxation in the Federal government.
I will assume the objections are sincere, and answer first with a brief recapitulation of the need for a general Federal power of taxation.
A government ought to contain in itself every power requisite to the full accomplishment of the objects committed to its care, and to the complete execution of the trusts for which it is responsible, free from every other control except a due regard to the public good and the sense of the People.
The duties of superintending the national defense and of securing the public peace against foreign or domestic violence require advance provisions for casualties and dangers.
The power of making these provisions can know no bounds other than the exigencies of the nation and the resources of the community.
Revenue is the essential engine to secure these provisions.
As there is no limitation on the Federal power to respond to such national exigencies, neither can there be a limitation on the means by which revenue is secured.
The power to secure such revenue is necessarily contained within the power to answer such national exigencies.
Theory and practice conspire to prove a Federal power of procuring revenue is unavailing when exercised over the States in their capacities as States.
Thus the Federal government must of necessity be invested with an unqualified power of taxation in the ordinary modes.
While I believe the propriety of a general power of taxation in the Federal government can safely rest on the evidence of these propositions alone, the antagonists of that power most zealously oppose the Constitution on this point.
Their arguments are in substance these: although the exigencies of the United States may prove unlimited, the Federal power of laying taxes ought to be confined because revenue is as critical to State governments as it is to the Federal government, and State governments are of equal or greater importance to the happiness of the People.
State governments therefore ought to command the means of supplying their needs with no less power than the Federal government possesses with respect to the needs of the United States.
An indefinite Federal power of taxation eventually might deprive State governments of the means of providing for their own necessities, and subject them entirely to the mercy of Congress.
Since the laws of the United States are the supreme law of the land – and the Congress has the power to pass all laws necessary and proper for carrying those laws into execution – the Federal government might at any time abolish the taxes imposed for State objects upon the pretense of an interference with its own.
Congress might allege a necessity of doing this in order to give efficacy to the national revenues, and by degrees all the resources of taxation might become the subjects of Federal monopoly, to the entire exclusion and destruction of State governments.
All observations founded upon the danger of usurpation ought to be referred to the composition and structure of the Federal government, and not to the nature or extent of its powers.
These arguments spring from two sources, only one of which is grounded in the science of politics, to wit, the view that the structure and composition of the Federal government might gradually lead to a Federal monopoly on tax revenues.
The other objection surfaces from the depths of human passion and prejudice, and floods the minds of its adherents with supposed schemes of Federal usurpation.
Those Who Would Limit the Federal Taxing Power Act Out of Jealousy or Timidity
The moment we commence conjecturing about Federal usurpations, we descend into an unfathomable abyss and put ourselves out of the reach of all reason.
Imagination can thus allow itself to range at will amidst the labyrinths of an enchanted castle – until the rash adventure bewilders the mind with limitless perplexities.
No matter what limits are erected against the powers of the Federal government, it is easy to imagine an endless train of possible dangers.
By indulging an excess of jealousy and timidity, we may bring ourselves to a state of absolute skepticism and irresolution.
All observations founded upon the danger of usurpation ought to be referred to the composition and structure of the Federal government, and not to the nature or extent of its powers.
In republics, strength is always on the side of the People.
Are not State governments invested with complete sovereignty by virtue of their own constitutions?
What security counters usurpation from that quarter?
Without doubt the answer is found in the manner of their formation and a due reliance upon those who are to administer them upon the People.
If the Federal Constitution affords the same species of security, all apprehensions on the score of usurpation should be discarded.
A disposition in the Federal government to encroach upon the rights of State governments is no more probable than a disposition in State governments to encroach upon the rights of the Federal government.
The prevailing party is such a contest would likely have the greater means of ensuring success.
In republics strength is always on the side of the People.
As State governments will commonly possess the most influence over the People, the natural outcome of such contests would benefit State governments at the expense of the Federal government.
But all conjectures of this kind are extremely vague and fallible: the safest course by far is to lay them altogether aside, and confine our attention wholly to the nature and extent of the powers as they are delineated in the Constitution.
Every thing beyond this must be left to the prudence and firmness of the People.
Since the People hold the scales of justice in their own hands, we must hope they will always take care to preserve the constitutional equilibrium between the Federal and State governments.
Upon this truth, the objections to an indefinite power of taxation in the United States must collapse.
Hamilton
Federalist 32: With the Sole Exception of Duties on Foreign Imports and Exports, States Retain Full Taxing Authority
SOME STATE GOVERNMENTS MISAPPREHEND A DANGER from a perceived power of the Federal government to control their levies of money.
A complete barrier to the oppressive use of such a power, however, exists due to the extreme hazard of (1) provoking the resentments of State governments, and (2) the sense of the People of the utility and necessity of local administrations for local purposes.
Individual States possess an independent and uncontrollable authority to raise their own revenues for the supply of their own wants.
Under the Constitution, the States retain that authority in the most absolute and unqualified sense, with the sole exception being duties on imports and exports.
Any attempt on the part of the Federal government to abridge that right would be a violent assumption of power, unwarranted by any article or clause in the Constitution.
The Constitution has no aim towards an entire consolidation of the State governments into one complete national sovereignty.
Such a plan would imply an entire subordination of the States, with all remaining powers dependent on the general will.
But as the Constitution aims only at a partial union or consolidation, the State governments clearly retain all the rights of sovereignty they had before its adoption.
The Three Areas in which the Federal Government Has Exclusive Authority
The only aspects of State governmental sovereignty passing to the Federal government are those rights the States have exclusively delegated to the United States.
Viewed another way, this exclusive delegation amounts to an exclusive alienation of certain State rights.
It exists in three cases only:
1. Where the Constitution in express terms grants an exclusive authority to the Federal government.
2. Where the Constitution in one instance grants an authority to the Federal government, and in another prohibits State governments from exercising the like authority.
3. Where the Constitution grants an authority to the Federal government, to which a similar authority in State governments would be absolutely and totally contradictory and repugnant.
(The final situation should be distinguished from those where the exercise of a concurrent federal and state jurisdiction might produce occasional interferences in the policy of any branch of administration, but not involve any direct contradiction or repugnancy in point of constitutional authority.)
These three cases of exclusive jurisdiction in the Federal government may be exemplified by the following instances:
1. Where the Constitution in express terms grants an exclusive authority to the Federal government.
The Constitution expressly provides the Federal government shall exercise “exclusive legislation” over the district to be appropriated as the seat of government, to wit: the District of Columbia. Art. I, § 8, cl. 17.
By this grant of exclusive authority, the States alienate any authority to legislate over the District of Columbia.
2. Where the Constitution in one instance grants an authority to the Federal government, and in another prohibits the States from exercising the like authority.
For instance, the Constitution empowers the Federal government “to lay and collect Taxes, Duties, Imposts and Excises,” Art. I, § 8, cl. 1, while another clause declares: “No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection laws.” Art. I, § 10, cl. 2.
These clauses result in an exclusive Federal power to lay duties on imports and exports, with the particular exception of State inspection laws.
This exclusive power in the Federal government to lay duties on imports and exports is abridged by another clause, which declares that no tax or duty shall be laid on articles exported from any State.
In consequence, the exclusive power in the Federal government to lay duties on imports and exports extends only to imports.
3. Where the Constitution grants an authority to the Federal government, to which a similar authority in State governments would be absolutely and totally contradictory and repugnant.
This third case of an alienation of State sovereignty is found in that clause which declares the Federal government shall have power “to establish a uniform rule of Naturalization . . . throughout the United States.”
This must necessarily be exclusive, for if each State government had the power to prescribe a distinct rule, there could be no uniform rule.
The Federal power “to lay and collect Taxes, Duties, Imposts and Excises” Art. I, § 8, cl. 1, also raises the distinct concept of dual Federal and State sovereignty with respect to that power.
This is manifestly a concurrent and coequal authority in the Federal government and State governments.
The power “to lay and collect taxes, duties, imposts and excises” contains no expression making that power exclusive in the Federal government, aside from taxes on imports and exports.
Nor does the Constitution include any independent clause or sentence prohibiting State governments from laying and collecting taxes on items other than imports or exports.
The inclusion of a restriction on imports and exports implicitly admits that State governments would otherwise possess the power the restriction excludes.
It further implies the authority of State governments to impose all other taxes remains undiminished.
The restriction in question amounts to a negation of one thing, and an affirmance of another.
It is a negation of the authority of State governments to impose taxes on imports and exports, and an affirmance of their authority to impose them on all other articles.
The Federal and State Powers of Taxation Are Complementary
There is no repugnancy between the Federal and State powers of taxation.
No construction of the Constitution would work an exclusion on State governments.
It is possible a State government might lay a tax on a particular article which might render it inexpedient that a further tax should be laid on the same article by the Federal government, but it would not imply the constitutional inability to impose a further tax.
The quantity of the imposition – and the expediency or inexpediency of an increase on either side – would be questions of mutual prudence, but there would be no direct contradiction of power.
The particular policy of the Federal and State systems of finance might now and then not exactly coincide, and might require reciprocal forbearance, but the mere possibility of inconvenience in the exercise of powers cannot alienate and extinguish a pre-existing right of sovereignty.
Only an immediate constitutional repugnancy can by implication alienate and extinguish a preexisting right of sovereignty.
The Federal power “to lay and collect taxes, duties, imposts and excises” also raises the distinct concept of dual Federal and State sovereignty with respect to that power. This is manifestly a concurrent and coequal authority in the Federal government and State governments. The power “to lay and collect taxes, duties, imposts and excises” contains no expression making that power exclusive in the Federal government, aside from taxes on imports and exports. Nor does the Constitution include any independent clause or sentence prohibiting State governments from laying and collecting taxes on items other than imports or exports.
Dual (Concurrent) Sovereignty Can and Will Exist between the Federal Government and State Governments
The necessity of a concurrent jurisdiction in certain cases results from the division of the sovereign power.
Any State authority which the Constitution does not explicitly divest in favor of the Federal government remains with the State governments in full vigor.
This is not a theoretical consequence of that division, but is clearly admitted by the whole tenor of the Constitution.
We there find – in those cases where it was deemed proper to have exclusive Federal authority – the most pointed care was expended to insert negative clauses prohibiting the exercise of those authorities by the States. Article I, section 10, consists altogether of such provisions.
Its three paragraphs provide:
“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
“No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Control of the Congress.
“No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.”
These expressions are clear indications of the sense of the Constitutional Convention.
It furnishes a rule of interpretation which justifies the position I have advanced and refutes every hypothesis to the contrary.
Hamilton
Federalist 33: The Plain Meanings of the Necessary and Proper Clause and the Supremacy Clause
THE REMAINING ARGUMENTS against the Federal power to tax focus on two clauses that allegedly will harm the States irremediably.
The first clause – the Necessary and Proper Clause – authorizes the Federal legislature “to make all laws which shall be necessary and proper for carrying into execution the powers by that Constitution vested in the government of the United States, or in any department or officer thereof.” Art. I, ¶8, cl. 18, emphasis added.
The second– the Supremacy Clause – declares “that the Constitution and the laws of the United States made in pursuance thereof, and the treaties made by their authority shall be the supreme law of the land, any thing in the constitution or laws of any State to the contrary notwithstanding.” Art. I, cl. 2, emphasis added.
The Two Clauses Are Neither Extraordinary Nor Harmful
State and local governments have in some instances misrepresented these powers as pernicious engines that will destroy their governments and exterminate the liberties of the People.
Some describe a hideous monster whose devouring jaws would spare neither sex nor age, high nor low, sacred nor profane.
And yet, after all this clamor, it may be affirmed with perfect confidence that the constitutional operation of the Federal government would be precisely the same whether these clauses were entirely obliterated or repeated in every article.
The clauses simply declare a truth which would have resulted by necessary and unavoidable implication from the very act of constituting a Federal government and vesting it with certain specified powers.
The proposition is so clear that moderation itself can scarcely listen to the copious railings vented against it.
The first clause– known as the Necessary and Proper Clause – authorizes the Federal legislature “to make all laws which shall be necessary and proper for carrying into execution the powers by that Constitution vested in the government of the United States, or in any department or officer thereof.”
Art. I, ¶8, cl. 18.
The Necessary and Proper Clause Explained
What is a power but the ability or faculty of doing a thing?
What is the ability to do a thing but the power of employing the means necessary to its execution?
What is a legislative power but a power of making laws?
What are the means to execute a legislative power but laws?
What is the power of laying and collecting taxes, but simply a legislative power – a power of making laws – to lay and collect taxes?
What are the proper means of executing such a power, but necessary and proper laws?
A power to lay and collect taxes must be a power to pass all laws necessary and proper for the execution of that power. The clause under attack does no more than declare the same truth, to wit, that the Federal government – to whom the power of laying and collecting taxes has been given – might pass all laws necessary and proper to carry into effect the execution of that power.
The Power to Tax Is the Most Important Delegated Power
I have explained the meaning of the Necessary and Proper Clause as applied to the power of taxation because it is the most important of the authorities conferred upon the Federal government.
The logic supporting its use inexorably lead to the same result in relation to all other powers declared in the Constitution.
And it is expressly to execute those powers that the Constitution authorizes the national legislature to pass all necessary and proper laws.
Any objection to this clause ought to be referred to the specific power to which it applies.
The Necessary and Proper Clause is itself perfectly harmless.
The Necessary and Proper Clause Was Added to Refute Those Who Would Contend Such Power Does Not Exist
But suspicion might ask: Why was the Necessary and Proper Clause introduced?
The answer is: for greater caution to guard against the caviling refinements by those who would curtail and evade the legitimate authorities of the Federal government.
The Convention foresaw the greatest threat to our political welfare would be the resistance of State governments to Federal authority, and that nothing should be left to construction on so cardinal a point.
But whatever the inducement to it, the wisdom of the precaution is evident from the cry raised against it.
Congress Shall Have the Initial Say on What Is Necessary and Proper
It also may be asked: Who is to judge the necessity and propriety of the laws to be passed for executing the powers of the Federal government?
In the first instance, the Federal government – like every other – must judge the proper exercise of its own powers.
The People Have the Ultimate Say on What Is Necessary and Proper
In the last instance, the power rests with its constituents. If the Federal government should overpass the bounds of its just authority and make a tyrannical use of its powers, the People – whose creature it is – must take such measures to redress the injury done to the Constitution as the exigency may suggest and prudence justify.
The propriety of a law – in a constitutional light – must always be determined by the nature of the powers upon which it is founded.
If the Federal legislature attempted to vary the law of descent in any State, it would be evident it had exceeded its jurisdiction and infringed upon the jurisdiction of that State.
If the Federal government (upon the pretense of an interference with its revenues) should undertake to abrogate a land tax imposed by the authority of a State government, said abrogation would be an invasion of the concurrent jurisdiction over this species of tax, which the Constitution assumes exists in State governments?
Should there ever be a doubt in this type of case, it would be entirely due to those who have labored to envelop the plainest and simplest of truths in a cloud of obscurities.
The second– known as the supremacy clause – declares “that the Constitution and the laws of the United States made in pursuance thereof, and the treaties made by their authority shall be the supreme law of the land, any thing in the constitution or laws of any State to the contrary notwithstanding.” Art. VI, cl. 2.
The Supremacy Clause Is a Logical Statement of Supreme Authority
What inference shall be drawn from the clause stating the laws of the Federal government are to be the supreme law of the land?
What would such laws amount to if they were not the supreme law of the land?
They would amount to nothing.
A law – by the very meaning of the term, includes supremacy.
It is a rule which those to whom it is prescribed are bound to observe.
This results from every political association.
If individuals enter into a state of society, the laws of that society must be the supreme regulator of their conduct.
If a number of political societies enter into a larger political society, the laws the larger may enact – pursuant to the powers entrusted to it by its constitution – must necessarily be supreme over those societies, and the individuals of whom they are composed.
If the laws of the larger society were not supreme, each law would be a mere treaty between the larger and smaller society – dependent on the good faith of the parties – and not a government, which is only another word for political power and supremacy.
The Supremacy Clause Extends to Constitutional Acts Only
It does not follow from the doctrine of supremacy that acts of the large society which are not pursuant to its constitutional powers – but which are invasions of the residuary authorities of the smaller societies – will become the supreme law of the land.
These will be merely acts of usurpation, and will deserve to be treated as such.
Like the clause authorizing necessary and proper laws, the clause which declares the supremacy of the laws of the United States only declares a truth which flows immediately and necessarily from the institution of a Federal government.
It expressly confines this supremacy to laws made pursuant to the Constitution.
This is another instance of caution in the Convention, by including in express terms a limitation that would otherwise be necessarily implied.
A new law laying a tax for use by the Federal government would be supreme in its nature, and could not legally be opposed or controlled.
But a law abrogating or preventing the collection of a tax laid by a State (aside from imports and exports) would not be the supreme law of the land, but a usurpation of power not granted by the Constitution.
As far as an improper accumulation of State and Federal taxes on the same object might tend to render the collection difficult or precarious, this would be a mere mutual inconvenience.
It would arise from a superiority or defect of power on either side, but from an injudicious exercise of power by one or the other, in a manner equally disadvantageous to both.
I would hope and presume that mutual interest would dictate a concert in this respect which would avoid any material inconvenience.
Under the Constitution, State governments retain an independent and uncontrollable authority to raise revenue to any extent of which they may stand in need – by every kind of taxation – except duties on imports and exports.
In Federalist 34, I will show this concurrent jurisdiction was the only possible substitute for an entire subordination of State taxation authority to that of the Federal government
Hamilton
Federalist 34: Concurrent Federal and State Power to Tax
The Federal and State Powers to Tax Are Almost Identical, Allowing Both to Satisfy Their Needs
UNDER THE CONSTITUTION, EACH STATE GOVERNMENT has coequal authority with the Federal government to lay and collect taxes, except as to duties on imports.
The greatest part of local resources are open to taxation for supplying revenues for the States.
The States therefore possess means as abundant as could be desired for the supply of their own wants.
Coequal Taxing Authority Already Exists and Works Well
Relying upon abstract principles, some argue such coequal taxing authority cannot exist.
Their suppositions and theories fail when measured against fact and reality.
Abstract principles are proper enough to show a thing ought not to exist.
But when a thing already exists in fact and reality, and abstract principles are summoned to prove it cannot exist, fact and reality must triumph.
Abstract principles are proper enough to show a thing ought not to exist. But when a thing already exists in fact and reality, and abstract principles are summoned to prove it cannot exist, fact and reality must triumph.
The Dual Roman Legislatures Proved Coequal Authority Can Work
In the Roman republic, the legislative authority of last resort resided in two distinct and independent legislatures.
Each had the power to annul or repeal the acts of the other. I allude to the comitia centuriata – the Century Assembly – and the comitia tributa – the Tribal Assembly. In the Century Assembly the people voted through representatives known as centuries.
It was so arranged to give a superiority to the patrician interest. In the Tribal Assembly numbers prevailed, so the plebian interest was entirely predominant.
It would be easy in the abstract to prove the unfitness of granting each the seemingly contradictory authority to annul or repeal the acts of the other, but an inhabitant of ancient Rome who undertook such an exercise would have been regarded as a lunatic.
These two legislatures coexisted for ages, and the Roman republic attained to the utmost height of human greatness.
Neither the Federal Nor State Governments Can Annul the Acts of the Other
In the case of coequal authority of the Federal government and State governments to lay and collect taxes, neither side has the power to annul the acts of the other.
And in practice there is little reason to apprehend any conflict.
In the course of time, the wants of the States will naturally reduce themselves within a very narrow compass.
In the interim, the United States will probably find it convenient to abstain wholly from those objects to which the particular States would be inclined to resort.
We cannot leave the Federal government entrusted with the care of the national defense without the capacity to provide for the protection of the community against future invasions of the public peace by foreign war or domestic convulsions.
We can form a more precise judgment of the true merits of this question by comparing the proportion of Federal to State objects requiring taxes to sustain them.
We shall discover the Federal objects are altogether unlimited, and the State objects circumscribed within very moderate bounds.
While pursuing this inquiry, one must look beyond the present to the future, to our posterity. Constitutions of civil governments are framed not upon a calculation of existing exigencies, but upon a combination of these with the probable exigencies of ages, according to the natural and tried course of human affairs.
One cannot gauge the extent of any power lodged in a national government by estimating its immediate necessities.
There ought to be a capacity to provide for future contingencies as they may happen.
Since future contingencies are unlimited by nature, the capacity to respond to such contingencies must also be unlimited.
It is possible that a sufficient computation might be had of the quantity of revenue requisite to discharge the subsisting engagements of the Federal government, and to maintain those establishments in times of peace.
While peace is a useful starting point, it would be the extreme of folly to stop there.
We cannot leave the Federal government entrusted with the care of the national defense without the capacity to provide for the protection of the community against future invasions of the public peace by foreign war or domestic convulsions.
And once we commence that undertaking, can we stop at anything less than an indefinite power in the Federal government to provide for emergencies as they may arise?
Judging from the history of mankind, the fiery and destructive passions of war reign more powerfully in the human breast than the mild and beneficent sentiments of peace. To model our political systems upon speculations of lasting tranquility is to calculate on the weaker springs of the human character.
Some assert it is easy to form a rational judgment of a proper provision against probable dangers.
To these individuals we may safely issue a challenge: bring forward your data, so we can confirm your facts are as vague and uncertain as any that could be produced to establish the probable duration of the planet.
Observations confined merely to the prospects of internal attacks deserve no weight.
If we mean to be a commercial people, our policy must be to defend that commerce.
The support of a navy and of naval wars involve contingencies which baffle all political arithmetic.
To its benefit, our Constitution undertakes the novel – and some would say absurd – approach of tying up the hands of government from engaging in an offensive war founded upon reasons of state. Clouds of war have hovered over parts of Europe and the Mediterranean for centuries.
If they should again break forth into a storm, who but we can ensure our own safety?
Even if the storm fails to reach us, what security have we that our tranquility will remain undisturbed from some other cause or quarter?
Peace or war will not always be left to our option, even if we were to practice complete moderation and forsake ambition.
Who could have imagined at the conclusion of the Revolutionary War that France and Britain – wearied and exhausted as they both were – would have looked so soon at each other with so hostile an aspect?
The Instinct to Fight Is More Powerful than the Instinct for Peace
Judging from the history of mankind, the fiery and destructive passions of war reign more powerfully in the human breast than the mild and beneficent sentiments of peace.
To model our political systems upon speculations of lasting tranquility is to calculate on the weaker springs of the human character.
The Greatest Expense of Any Government Is Preparing for War
In every government, the chief sources of expense are wars, rebellions, and the enormous debts they cause.
War and rebellion are the two most mortal diseases of society.
The expenses necessary to guard the body politic against them dwarf those relative to the mere domestic police of a state, the support of its legislative, executive, and judicial departments (along with their different appendages), and the encouragement of agriculture and manufactures (which comprehend almost all the objects of state expenditure).
In the kingdom of Great Britain, not above a fifteenth part of its annual income is appropriated to agriculture and manufactures.
The rest is absorbed in the payment of the interest of debts contracted for carrying on its wars and maintaining its fleets and armies.
Peace or war will not always be left to our option, even if we were to practice complete moderation and forsake ambition. Who could have imagined at the conclusion of the Revolutionary War that France and Britain – wearied and exhausted as they both were – would have looked so soon at each other with so hostile an aspect?
Some might say the necessary expenses of a republic cannot be compared to the expenses incurred in a monarch’s prosecution of ambitious enterprises and vainglorious pursuits.
But if we put aside the extra domestic expenses an ostentatious monarchy entails, the expenses it devotes to war would be proportional to those incurred in the defense of a republic.
In Order to Defend against War and Rebellion, the Expenses of the Federal Government Will Exceed Those of State Governments
Even if the United States endures only a common share of the events which disturb the peace of nations, the objects of Federal expenditures will always far exceed the objects of State and local expenditures.
As proof, one need consider only the enormous debts incurred by the States to complete our revolutionary war for independence.
Once these debts are discharged and the Federal government assumes the burdens of defense, the only call for revenue of any consequence from State governments will be for the sums appropriated annually to pay its own civil list of appointees to the Federal government.
The Potential Expenses of the Federal Government Are Unlimited
We have framed a government for posterity as well as ourselves.
For those provisions designed to be permanent, we ought to calculate permanent causes of expense, not temporary ones.
If this principle be just, a provision in favor of State governments for an annual sum of about 200,000 British pounds would be proper.
The exigencies of the Federal government, on the other hand, are susceptible of no limitation, even in imagination.
In response, some contend State governments ought to command – in perpetuity – an exclusive power to levy taxes to secure revenue for State expenditures beyond the sum of £200,000 needed to pay for their civil lists.
But extending the power of the States to the exclusion of the Federal government would unwisely divert the resources of the community away from those most in need of them to secure the public welfare.
Such a limitation also ignores the potentially unlimited needs of the Federal government.
It Would Be Improper to Divide Sources of Taxation Based on the Comparative Needs of Governments
If the authors of the Constitution had been inclined to divide the sources of taxation between the State and Federal governments in proportion to their comparative needs, all of the available tax sources would have been either been too much or too little for their present needs, and too much for their future needs.
If States were given authority over import duties, they would command two thirds of the resources of the nation to defray from a tenth to a twentieth part of its expenses.
The Federal government would be left with one third of the nation’s resources to defray 9/10ths to 19/20ths of its expenses.
The Constitutional Convention decided concurrent jurisdiction was the only admissible substitute for an entire subordination of State authority to Federal authority in the article of taxation. Had there been any separation of the objects of taxation, the great interests of the United States would have been sacrificed to the great power of the individual States.
Even if the Constitution granted State governments exclusive power of taxing houses and lands, it would not eliminate the shortage of the means supplied to achieve the end envisioned.
State governments would possess one third of the resources of the community to supply one tenth of its wants.
If some other fund could have been selected and appropriated, it still would have been inadequate to discharge the existing debts of the particular State governments, leaving them dependent on the Federal government.
The Constitutional Convention decided concurrent jurisdiction was the only admissible substitute for an entire subordination of State authority to Federal authority in the article of taxation.
Had there been any separation of the objects of taxation, the great interests of the United States would have been sacrificed to the great power of the individual States.
Concurrent jurisdiction was thought preferable to subordination.
Concurrent power over taxation reconciles the need for an indefinite constitutional power of taxation in the Federal government with an adequate and independent power in the States to provide for their own necessities.
Hamilton
Federalist 35: Import and Manufacturing Taxes; the Likely and Proper Composition of the House of Representatives
HERE I SHALL DEMONSTRATE why limiting the federal taxing authority to import duties is unwise. I also respond to the sentiment that calls for equal representation of all classes in the national popular assembly.
Federal Tax Revenues Must Not Be Limited to Duties on Imports
Restricting the Federal government’s power of taxation to particular objects would naturally cause an undue proportion of the public burdens to fall upon those objects.
Such a restriction also would oppress particular branches of industry and lead to an unequal distribution of taxes among the several States as well as among the citizens of the same State.
The federal power of taxation is indefinite. If that power were confined to duties on imports, the Federal government would extend those duties to an injurious excess due to its inability to command other resources.
Duties Must Be Kept Sufficiently Low to Prevent the Smuggling that Will Undermine Tax Revenue
Some say duties can never be too high because they tend to discourage extravagant consumption, produce a favorable balance of trade, and promote domestic manufactures.
The argument favors an extreme – and like all extremes – it tends towards ruin.
Exorbitant duties on imported articles naturally beget a general spirit of smuggling.
Smuggling always undermines the fair trader, and eventually the tax revenue itself.
High Duties Protect the Manufacturing Classes and Oppress Merchants
High duties result in an improper form of community tribute to the manufacturing classes, who benefit the most from the monopoly of markets excessive tariffs foster.
High duties result in artificial price inflation, which oppresses the merchant, who often must pay the duty just to make the sale.
While the consumer generally pays the duty when demand equals supply at market, when markets are overstocked, most of the duty falls upon the merchant, who is sometimes forced to exhaust profits and even break in on capital.
A division of an import duty between buyer and seller happens more often than commonly imagined. Sometimes it is impossible to raise the price of a commodity in exact proportion to each additional imposition laid upon it.
The merchant – especially in a country of small commercial capital – must often keep prices down to expedite a sale.
When the merchant is forced to pay the duty to complete a sale, the duty acts as an additional tax upon the importing State.
States Importing Little Would Contribute Less to the National Treasury in Proportion to their Abilities
High duties produce inequalities between States importing much and States importing little, for the citizens of States importing little pay fewer duties, and thereby contribute less to the national treasury in a ratio to their abilities.
The higher the duties, the greater the inequality.
Manufacturing States Also Pay Less than their Share Because They Import Less, so Excise Taxes on Their Manufactures Is Appropriate
Confining the federal taxing power to duties or imports only would foster inequality between those States with manufacturing resources and those without.
States with manufacturing facilities consume fewer imported articles and thereby contribute less to the public treasury in a ratio to their abilities.
To eliminate this disparity, recourse must be had to excises, the proper objects of which are particular kinds of manufactures.
New York is more deeply interested in these considerations than her citizens may be aware.
New York, an importing state, is not likely speedily become a manufacturing state.
She would suffer doubly by limiting to commercial imposts the jurisdiction of the Federal government.
Necessity often Occasions False Hopes, False Reasoning, and a System of Measures Correspondingly Erroneous
High duties depress consumption and thus the revenue of the taxing authority.
This serves as a natural brake on any tendency to raise import duties to an injurious extreme.
While this is readily true so as long as other sources of taxation remain open, should those sources be closed – hope – stimulated by necessity, would beget experiments.
Fortified by rigorous precautions and additional penalties, these might work at first. But with time comes leisure enough to contrive expedients to elude these new precautions.
The first success would be apt to inspire false opinions, requiring a long course of subsequent experience to correct.
And the inequalities mentioned above would still ensue even if duties are not raised to injurious excess.
Import Duties Should Be Administered as a Federal Common Fund
My final point regarding duties is they should be shared among the States.
As noted above, where duties are normal, the ultimate purchaser usually pays, whether or not said buyer is situated in the importing State.
Thus it is far more equitable that the duties on imports to go into a common stock, than to redound them to the exclusive benefit of the importing State.
And now I turn to the important question of the likely composition of the House of Representatives, and whether there ought to be any quotas or restrictions imposed to ensure the body is fairly representative of the People.
For Good Reasons, the House of Representatives Will Never Include Citizens from Every Class
We often hear the House of Representatives is insufficiently numerous to receive all the different classes of citizens.
Those who would increase its size – or require representatives from every class – believe the interests and feelings of every part of the community should be combined, thereby producing a due sympathy between the representative body and its constituents.
This argument is seductive initially but ultimately specious.
It is well calculated to lay hold of the prejudices of those to whom it is addressed.
If one dissects the argument, it vanishes into nothing but fair sounding words.
To begin with, all that can be reasonably meant by a knowledge of the interests and feelings of the People is an acquaintance with the general genius, habits, and modes of thinking of the citizenry at large, and with the resources of the country.
In any other sense the proposition has no meaning at all, or an absurd one.
Freedom of electoral choice naturally leads to the selection of landholders, merchants, and those of the learned professions to representative assemblies, with too few exceptions to have any influence on the spirit of the government.
As for the noble goal of a due sympathy between the represented and the representative, the composition of popular assemblies always tends toward the merchant by the natural choice of those of the lesser arts.
The idea that all classes of the People should be represented in the House of Representatives by actual members from each of the classes is altogether visionary.
For one thing, it would never take place in practice, unless the Constitution expressly required it.
Its object also is impracticable, for it is impossible to construct or enforce a plan to require a representative from each of the classes.
Merchants Are Natural Representatives of their Own Class, and of the Manufacturing and Mechanical Arts as Well
As for the noble goal of a due sympathy between the represented and the representative, the composition of popular assemblies always tends toward the merchant by the natural choice of those of the lesser arts.
Mechanics and manufacturers will almost always be inclined to give their votes to merchants rather than persons of their own professions or trades.
Mechanics and manufacturers furnish the materials of mercantile enterprise and industry.
Many are immediately connected with the operations of commerce.
They know the merchant is their natural patron and friend, and will more effectually promote their interests than they would themselves.
And in a deliberative assembly, the talents of the mechanic and manufacturer are little in demand.
The arguments of merchants carry more weight and influence, rendering them more equal in a contest should any spirit unfriendly to their interests infuse itself into the public councils.
Our own experience confirms that both artisans and manufacturers commonly bestow their votes upon merchants and those whom they recommend. We must therefore consider merchants as the natural representatives of all these classes of the community.
The arguments of merchants carry more weight and influence, rendering them more equal in a contest should any spirit unfriendly to their interests infuse itself into the public councils. Our own experience confirms that both artisans and manufacturers commonly bestow their votes upon merchants and those whom they recommend. We must therefore consider merchants as the natural representatives of all these classes of the community.
The Landed Interests Will Represent All Landholders
The landed interests will be perfectly united from the wealthiest landlord to the poorest tenant, particularly in relation to taxes.
Any tax laid on land affects the proprietor of millions of acres down to the proprietor of one.
Since common interest is the surest bond of sympathy, every landholder desires to keep the taxes on land as low as possible.
Even if we suppose the interests the opulent landholder and the middling farmer are distinct, is there any reason to conclude one would stand a better chance than the other of being elected to the Congress?
If we look at the legislature of New York, moderate proprietors of land prevail in both its assembly and senate.
Those inspiring the greatest confidence naturally receive the most votes, whether they be individuals of large fortunes, moderate property, or no property at all.
Those of the Learned Professions Will Be Elected According to their Skills
All that remain are members of the learned professions, who truly form no distinct interest in society.
They will have confidence in and be the choice of each other – and the community – according to their situation and talents.
Requiring Representatives from Every Class Is Unnecessary, for the Most Likely to Be Elected Will Best Serve the Nation’s Interests
The argument in favor of a system or quota to diversify representation of the various classes in Congress assumes in error that merchants, landholders and the learned professions will not understand or attend to the feelings and interests of the community.
Where is the danger that the interests and feelings of the different classes of citizens will not be understood or attended to by these classes of likely representatives, landholders, and the learned professions?
The argument in favor of a system or quota to diversify representation of the various classes in Congress assumes in error that merchants, landholders and the learned professions will not understand or attend to the feelings and interests of the community. Where is the danger that the interests and feelings of the different classes of citizens will not be understood or attended to by these classes of likely representatives, landholders, and the learned professions?
Will not the landholder know and feel whatever will promote or insure the interest of landed property?
The landholder is imbued with a self-interest prone to resist every attempt to prejudice or encumber that species of property.
The merchant, too, will be disposed to understand and cultivate the interests of the mechanic and manufacturing arts, for their commerce is closely allied.
And those representatives drawn from the learned professions will likely prove themselves impartial arbiters of the rivalries among industries, standing ready to promote one or the other as shall appear conducive to the general interests of society.
The individual whose situation leads to extensive inquiry and information is more likely to be a competent judge of the nature, extent, and foundation of the momentary humors and dispositions prevailing in particular parts of the society than one whose observation travels not beyond the circle of neighbors and acquaintances.
A candidate for the favor of the People depends upon the votes of fellow citizens for election to and continuance in office.
Such an individual naturally takes care to become informed of the dispositions and inclinations of the citizens, and allows them their proper degree of influence upon his or her conduct.
This dependence of the representative upon the constituent – plus their mutual obligation to obey the laws to which the representative gives assent – are the only true and strong chords of sympathy between the electors and the elected.
Proper Administration of the Federal Power to Tax Demands that Representatives Be Chosen from the Citizenry at Large
Finally, no part of the administration of government requires more extensive information and thorough knowledge of the principles of political economy than the business of taxation.
The representative who understands that the most productive system of finance is the least burdensome will be the least likely to resort to oppressive expedients or to sacrifice any particular class of citizens to the procurement of revenue.
Such individuals are more likely to be drawn from citizenry at large than from a particular class or group.
The representative who understands that the most productive system of finance is the least burdensome will be the least likely to resort to oppressive expedients or to sacrifice any particular class of citizens to the procurement of revenue.
For a discussion of the related objection based upon the supposedly insufficient number of members in the House of Representatives, I direct the reader to Federalist 55.
Hamilton
Federalist 36: The Power of Taxing within States Is One of the Most Important Powers of the Federal Government
Representation in Congress will consist almost entirely of proprietors of land, of merchants, and of members of the learned professions, all of whom will truly represent the different interests and views of the various classes of the community, as I explained in Federalist 35.
While variations do exist in local legislatures, they are exceptions to the rule, and not in sufficient number to influence the general complexion or character of the government.
There are strong minds in every walk of life that rise above the disadvantages of situation.
They will command the tribute due to their merit, not only from the classes to which they belong, but from the society in general.
The door ought to be equally open to all.
To the credit of human nature, I trust we shall see examples of such vigorous plants flourishing in the soil of Federal as well as of State legislation.
Occasional instances of this sort, though, do not render less conclusive the reasoning founded upon the general course of things.
Merchants Will Well Represent Manufacturers and Mechanics
Even if the subject of representations is viewed in different lights, the same aspect appears.
There is no greater affinity or relation of interest between the carpenter and blacksmith, the linen manufacturer or stocking weaver, than there is between the merchant and all of them.
It is well known there are great rivalries between different branches of the mechanic or manufacturing arts as there are between any of the departments of labor and industry.
Unless the representative body of Congress were to be far more numerous than would be consistent with any idea of regularity or wisdom in its deliberations, it is impossible that representation of all classes would ever be realized in practice.
Those who suggest or demand otherwise have fitted their argument with too loose a garb to admit even of an accurate inspection of its real shape or tendency.
There are strong minds in every walk of life that rise above the disadvantages of situation. They will command the tribute due to their merit, not only from the classes to which they belong, but from the society in general. The door ought to be equally open to all.
Congress Will Comprehend the Nuances of State Tax Matters
The word “tax” appears several times in the Constitution, with two of the most prominent occasions in Article I, governing the power of Congress.
Article I, section 2, clause 3, provides that “direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, . . . .”
Section 8 of the same article adds: “The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States . . . .”
Opponents of the Constitution asserted the Federal power of internal taxation cannot be exercised with advantage, from a supposed lack of sufficient knowledge of local circumstances, as well as an interference between the revenue laws of the United States and of the particular States.
The supposition of a want of proper knowledge in the Federal legislature is entirely destitute of foundation.
If a State legislature demands a knowledge of local details, undoubtedly it acquires the information from county or municipal members.
A like knowledge will be obtained in Congress from the representatives of each State.
We ought to presume the individuals sent to Congress will be possessed of the necessary degree of intelligence to be able to communicate that information.
As applied to taxation, the knowledge of local circumstances does not require a minute topographical acquaintance with all the mountains, rivers, streams, highways, and bypaths in each State.
It more properly requires a general acquaintance with situation and resources of a State, its agriculture, commerce, manufactures, with the nature of its products and consumptions, and the different degrees and kinds of its wealth, property, and industry.
Committees or Individuals Compose Most Initial Taxation Plans
Nations in general – even under governments of the more popular kind – usually commit the administration of their finances to a single individual or to boards composed of a few individuals, who initially digest and prepare the plans of taxation, which are afterwards passed into laws by the authority of the sovereign or legislature.
The supposition of a want of proper knowledge in the Federal legislature is entirely destitute of foundation. If a State legislature demands a knowledge of local details, undoubtedly it acquires the information from county or municipal members. A like knowledge will be obtained in Congress from the representatives of each State. We ought to presume the individuals sent to Congress will be possessed of the necessary degree of intelligence to be able to communicate that information.
Inquisitive and enlightened statesmen are everywhere deemed the best qualified to make a judicious selection of the objects proper for revenue.
This is a clear indication – as far as the sense of mankind can have weight in the question – of the extent of knowledge of national and local circumstances requisite to the purposes of taxation.
The Power to Impose Federal Taxes within States Is Essential
Federal taxes imposed within States are both direct and indirect. As for indirect taxes – that is, duties and excises on articles of consumption – I am at a loss to conceive the nature of any perceived difficulties.
The knowledge relating to these items is of a kind suggested by the nature of the article itself, or which can easily be procured from any well-informed individual, especially of the mercantile class.
The circumstances that distinguish one State’s situation from another are few, simple, and easily comprehended.
The principal thing to attend to would be avoiding those articles which had been previously appropriated as a revenue source by a particular State.
These items are determinable by ascertaining the revenue system of each State, it code of laws, and from information of the members from the several States.
Direct taxes seemed to draw the most opposition.
Taxation of Realty and Structures
The objection based on lack of knowledge of local circumstances initially appears to have more foundation when applied to real property or to houses and lands, but even in this view it does not bear a close examination.
Land taxes are commonly laid in one of two modes.
The first is by actual valuations, either permanent or periodical.
The second is by occasional assessments, at the discretion (or according to the best judgment) of officers whose duty it is to make them.
In either case, the execution of the business must be devolved upon persons in the character of commissioners or assessors, elected by the people or appointed by the government for the purpose.
All that the law can do is to name the persons or to prescribe the manner of their election or appointment, to fix their numbers and qualifications, and to draw the general outlines of their powers and duties.
There is nothing in all this that cannot be performed by Congress as by a State legislature.
The attention of either can only reach to general principles. As just noted, local details must be referred to those who are to execute the plan.
Congress Can Use State Systems to Collect Federal Taxes
A complete answer to all objections based on want of local knowledge is that Congress can lay and collect this species of taxes within each State by using the system of each State within that State.
Federal Taxes Will Be Collected Proportionally from Each State
The proportion of taxes collected within each State is not left to the discretion of Congress.
It will be determined by the numbers of each State, based on the actual census (or enumeration) of the People. Art. I, § 2, cl. 3.
Guarded circumspection guided the Convention to shut the door to partiality, oppression, or abuse.
In addition to this precaution, there is the provision that ‘all duties, imposts, and excises shall be uniform throughout the United States.” Art. I, § 8, cl. 1.
Congress Can Adjust Ineffective Taxation
Those in favor of the Constitution very properly observed in speech and by pen that the system of requisitions from States could be revived if the use of internal taxation of State citizens proved ineffective.
As if admitting the existence of a fallback fortress amounts to a concession of anything, opponent of the Constitution triumphantly asked, “Why not omit the power to tax within States in the first instance, and rely solely upon requisitions?”
First, as these papers frequently note, the former system of Federal requisitions from States as States almost failed during the Revolution.
The power of taxing individual State citizens also will be preferable because it will be more effectual.
Furthermore, the existence of such a power in the Constitution will have a strong influence in giving efficacy to requisitions should they be needed. When each State knows the United States may apply itself without their agency, it will be a powerful motive for exertion on their part.
The Interaction of Federal and State Taxation
We have already seen there can be no clashing or repugnancy of authority between the revenue laws of the United States and of its members.
In a strictly legal sense, their laws cannot interfere with each other.
It also is far from impossible to avoid an interference even in the policy of their different systems.
An effective expedient for this purpose will be the mutual abstention from those objects to which either side may have had recourse to first.
As neither can control the other, each will have an obvious and sensible interest in this reciprocal forbearance.
And where there is an immediate common interest, we may safely count upon its operation.
When the particular debts of the States are paid, and their expenses come to be limited within their natural compass, the possibility of interference almost will vanish.
A small land tax will answer the purpose of the States, and will be their most simple and most fit resource.
Double Taxation of the Same Revenue Is Unlikely
To excite the apprehensions of the People, many specters were raised out of the power of internal taxation.
Double sets of revenue officers, a duplication of their burdens by double taxation, and the frightful forms of odious and oppressive poll-taxes, have been played off with all the ingenious dexterity of political legerdemain.
I will expose the fallacious phantoms in turn.
Double Sets of Officers Collecting the Same Revenue Is Unlikely
There are two cases in which there can be no room for double sets of officers: where the right of imposing the tax is exclusively vested in the United States (which applies to the duties on imports), and where the object has not fallen under any State regulation or provision (which may be applicable to a variety of objects).
In all other cases, the probability is that the United States will either wholly abstain from the objects preoccupied for local purposes, or will make use of the State officers and State regulations for collecting an additional imposition.
This practice will save expense of collection, and best avoid any occasion of disgust to the State governments and to the People.
It is a practicable expedient for avoiding these inconveniences, and nothing more can be required than to show that the predicted evils do not necessarily result from the Constitution itself.
State Revenue Officers Can Collect Federal Taxes
As to any argument derived from a supposed system of Federal influence over the States, it is sufficient to say that it ought not to be presumed.
And if such a spirit should infest the councils of the United States, its most certain road to success would be employment of State officers as much as possible, and to attach them to the Federal government by an accumulation of their emoluments.
This would result turn the tide of State influence into the channels of the Federal government, instead of making Federal influence flow in an opposite and adverse current.
All suppositions of this kind are invidious, however, and answer no other end than to cast a mist over the truth.
Double Taxation Is Illusory
As to the suggestion of double taxation, the answer is plain: the revenue needs of the United States will be supplied in one way or another.
If done by the authority of the Federal government, it will not be done under the authority of State governments.
The quantity of taxes to be paid by the community will be the same in either case.
The capital resource of commercial imposts and duties – the most convenient branch of revenue – can be prudently improved to a much greater extent under Federal than State regulation.
This will render it less necessary to recur to more inconvenient methods, like requisitions from States.
A further advantage is its tendency towards a disposition of greater care in the choice and arrangement of taxation.
Commercial imposts are a rich tributary to the public treasury, and will diminish the necessity of those impositions which might create dissatisfaction in the poorer and most numerous classes of the society.
Happy it is when the interest the government has in the preservation of its own power coincides with a proper distribution of the public burdens, and tends to guard the least wealthy part of the community from oppression!
Poll Taxes Are an Anachronism, though Lawful
I, without scruple, confess my disapprobation of poll taxes, which are typically collected on adults prior to voting.
As a government revenue stream, they have prevailed from an early period in the States of New England, which have uniformly been most tenacious in defense of their rights.
Every State has power to impose taxes of this kind, although in several States poll taxes are unknown in practice.
State governments are not stigmatized as tyrannies because they possess this power.
I should lament to see them introduced into practice under the Federal government, but the power ought to exist. If they are lawful in the States, with what propriety can a like power in the Federal government be urged as an obstacle to its adoption?
There are certain emergencies of nations – in which expedients that in the ordinary state of things ought to be forborne – become essential to the public weal.
From the possibility of such emergencies, the government always ought to have the option of using them.
At present, there is a real scarcity of objects in this country which may be considered as productive sources of revenue.
This circumstance is reason enough not to abridge the discretion of the Federal government in this respect.
As I know of nothing exempting this portion of the globe from the common calamities that have befallen other parts of it, a poll tax may become an inestimable resource during certain critical and tempestuous conjunctures.
I acknowledge my aversion to every project calculated to disarm the Federal government of a single weapon which might be usefully employed for the general defense and security in any possible contingency.
The Judiciary Will Be Examined Separately, in Federalist 79 through Federalist 81
I have now completed examination of the powers vested in the United States which may be considered as having an immediate relation to the energy of the government, and endeavored to answer the principal objections made to them.
I have passed over in silence those minor contentions either too inconsiderable to have been thought worthy of hostilities by the opponents of the Constitution, or of too manifest propriety to admit of controversy.
The mass of judicial power might have claimed an investigation under this heading, but its organization and extent may be more advantageously considered separately, in Federalist 78 through Federalist 81.
Hamilton