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.
Hamiltonoriginal Federalist 34