Location: United States

Monday, July 11, 2005

Anti-Federalist Taxation through the States

The Constitution of the United States did not achieve ratification without squabble. As much as the Federalists believed that a strong central government was vital to survival, the anti-Federalists believed it was the surest way to erode the liberty they had fought Englad so hard to obtain. Chief among these threats to liberty was the power of taxation.

Under the Articles of Confederation, the federal government had to requisition tax revenues from the states. My previous post indicates that this caused problems with some states dragging their heels to provide needed revenues. The effect was that the federal government ground to a halt and was unable to function. This led the Federalists to support a power of direct taxation.

Patrick Henry was outraged at the suggestion:

"... the absolute control over the commerce of the United States and all external objects of revenue, such as unlimited imposts upon imports, etc. --- they are to be vested with every species of internal taxation; --- whatever taxes, duties and excises that they may deem requisite for the general welfare, may be imposed on the citizens of these states, levied by the officers of Congress, distributed through every district in America; and the collection would be enforced by the standing army, however grievous or improper they may be. The Congress may construe every purpose for which the state legislatures now lay taxes, to be for the general welfare, and thereby seize upon every object of revenue."

They were ultimately realists, though. They realized that the Confederal government had failed because it could not support itself. This is made clear by the "Anti-Federalist #21":

"The wheels of the general government having been thus clogged, and the arrearages of taxes still accumulating, it may be asked what prospect is there of the government resuming its proper tone, -unless more compulsory powers are granted? To this it may be answered, that the produce of imposts on commerce, which all agree to vest in Congress, together with the immense tracts of land at their disposal, will rapidly lessen and eventually discharge the present encumbrances. When this takes place, the mode by requisition will be found perfectly adequate to the extraordinary exigencies of the union. Congress have lately sold land to the amount of eight millions of dollars, which is a considerable portion of the whole debt."

In this passage, the author foresees no power is necessary to give to the Congress except the power to tax and regulate commerce, along with the power to sell, rent, or lease the land it owns. The meaning of this is made perfectly clear a few paragraphs later:

"A transfer to Congress of the power of imposing imposts on commerce, the unlimited regulation of trade, and to make treaties, I believe is all that is wanting to render America as prosperous as it is in the power of any form of government to render her; this properly understood would meet the views of all the honest and well meaning."

The "Anti-Federalist #32" deals with the power of taxation in detail. I'll summarize the arguments of "Brutus":

The Preamble states the purpose is to "Provide for the general welfare", which is a very broad phrase. The Constitution gives no hint as to the boundaries of "general welfare". This grants an expansive power to the federal government from the outset.

Congress is then given power to lay taxes. Those powers are not limited. Perhaps the only limitation is the length to which the definition of "general welfare" can be stretched.

Congress is also given powers to pass all laws "necessary and proper" to achieve its taxation goals. This is the final nail in the coffin of liberty as the federal government can now do whatever is necessary to force compliance with its tax laws.

Brutus makes clear what his concern is:

"...with regard to direct taxes; these include poll taxes, land taxes, excises, duties on written instruments, on everything we eat, drink, or wear; they take hold of every species of property, and come home to every man's house and pocket. These are often so oppressive, as to grind the face of the poor, and render the lives of the common people a burden to them. The great and only security the people can have against oppression from this kind of taxes, must rest in their representatives."

The Anti-Federalist position, then, was that Congress needed expanded powers of taxation, but that power must be limited. Otherwise, it would be the poor and common people (what we would call "middle class") who would bear the brunt of taxation. The only way they could possibly protect themselves was through the benificence of their representatives.

The Anti-Federalists came up with several creative solutions to this. Consider this proposed amendment by the Virginia Delegation:

"... no aid, charge, tax or fee, can be set, rated, or levied upon the people without their own consent, or that of their representatives, so elected; nor can they be bound by any law to which they have not, in like manner, assented for, the public good."

They wish to give power to Congress to set tax laws, but reserve the power of the states by requiring the consent of the people through their state legislature for taxes and laws.

The Massachusetts Delegation proposed:

"That Congress do not lay direct Taxes but when the Monies arising from the Impost and Excise are insufficient for the publick exigencies nor then until Congress shall have first made a requisition upon the States to assess levy and pay their respective proportions of such Requisition agreeably to the Census fixed in the said Constitution; in such way and manner as the Legislature of the States shall think best, and in such case if any State shall neglect or refuse to pay its proportion pursuant to such requisition then Congress may assess and levy such State's proportion together with interest thereon at the rate of Six per cent per annum from the time of payment prescribed in such requisition "

Congress could tax the state legislatures, and if the state leges were slow to pay, they would be charged six percent interest per year.

Rhode Island tried to have the best of both methods. After first reserving the right of negation to the states, it then proposed that the six percent interest be levied if they failed to pay.

Whatever else can be said about the intentions of our forefathers, it is clear that they intended for direct taxation of citizens not to take place. Rather, they believed that regulation of industry and commerce would provide enough opportunity for taxation that it would simply be redundant for citizens to be taxed directly. Further, it would be a great imposition and subversion of their liberty to do so. They were particularly concerned about the poor and middle classes being stripped of their small acculations through taxation.

My next post will examine how this general agreement on taxing commerce became a reliance on personal income taxes, and how that violates the principles upon which our country was founded.


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