Summary
The power of the government to act on behalf of the national security should
only be bounded by the needs of the nation and the resources. Since this is
partially determined through the amount of revenue available, the ability of the
government to gain revenue must not be hindered by anything except for the power
of the people represented in the legislative branch.
A serious flaw of the Articles of Confederation was that although it
gave Congress the responsibility for managing the needs of the confederacy,
it did not provide the means to do so. The government did not have the power to
directly collect taxes. Relying on requisitions and quotas from the state did
not fill the national treasury, and threatened to ruin the public credit.
The government's authority to tax should not be limited. The government should
know the full extent of its resources and then judge the necessity of taking
loans. This allows a nation to plan proactively for its prosperity and defense.
Creditors are also more likely to loan to a country that has full authority to
summon resources on its own, rather than being subject to the authority of 13
other decisions about the feasibility and speed of repaying those loans.
Critics claim that internal taxation should be the sole authority of local
government, and that revenues collected from trade should go to the federal
government. However, this policy not only places the federal government in
subordinate position to the states, but forces them to either be in a continual
state of not having enough money to provide for security and prosperity or to be
continually relying on the states.
Other critics have suggested that the federal government should be limited to
taxing only certain objects. However, these objects would bear an unfair burden,
the industry that is focused on would be unfairly taxed and the taxes would fall
unfairly amongst society and the separate states. For example, if the national
government could only tax imports, not only would this be an unfair burden on
the merchant class, but also an unfair advantage to the manufacturing states.
New York would especially suffer under this set of circumstances.
The current plan of government includes a concurrent tax system, in which both
the federal and the state governments maintain the authority to tax, except in
the case of imports and exports which are exclusively restricted from state's
authority.
Critics state that local governments have as great a need to provide for
exigencies as the national government. By relying on the national government to
meet those needs, the national government could take advantage of their power by
establishing such laws that make state taxation laws illegal--thereby destroying
the states by depriving them of their sustenance.
This could not happen, because the strength is always on the side of the people,
and they are most closely aligned with the state governments. It is less likely
that the national government will encroach upon the states as the other way
around. We must have faith in the people that they will always serve to balance
the power between the state and national government.
Furthermore, the state governments will never have a bigger burden of expenses
than the national government, because history and experience shows that the
biggest financial burden is the expense of wars. Since state governments do not
have the burden of paying for common defense, their need to tax will be limited
to paying the salaries of their civil servants.
The advantage of concurrent powers is that both the state and the national
government have an unlimited authority to collect revenue, without either being
subordinated to the other. It would be a good idea for the two organizations to
develop an understanding of what items are state taxable and what are federal
taxable. This will be mutually beneficial and will eliminate the possibility of
redundancy.
Critics claim that the federal government cannot levy effective internal taxes
due to being unfamiliar with local circumstances. They overlook that a well-
educated group of representatives from many localities have the same advantage
enacting taxes as if they were legislating for their own locality.
Although direct taxes vary the most from state to state, the federal government
will legislate only the process by which the taxes are to be assessed, while the
local people will choose the assessors of the land. Furthermore the national
census will eliminate any fear of bias in counting population.
Critics worry that extra taxes will pose a burden to the people in the form of
many collections agents. The collector of imposts will be the only national
agent, and the national government will use as much as it can, the local tax
collection agent. Additionally, there should be no fear that the amount of taxes
will increase, as the expenditures are the same, just distributed differently.
Some critics express concern over clauses in the U.S. Constitution
that imply limitless powers to the federal government. For example, the power of
the federal government to lay taxes must be accompanied by a power to pass all
laws necessary and proper to execute that power. This does not give any extra
powers to the federal government, only attributes to them the necessary powers
to tax the people. The ultimate judge of what is necessary and
proper is the federal government in the first instance and its
constituents, the people, in the last. The people will not allow the federal
government to overstep its bounds.
Additionally, the phrase "supreme law of the land" is nothing more than stating
that the federal laws will be supreme to all other. Furthermore, it only allows
laws to be supreme that have been made within the guidelines of the U.S.
Constitution. Therefore a law that attempts to stop a state government for
collecting taxes, does not go against the federal governments authority to tax,
but it is not supreme because it is not allowed for by the U.S.
Constitution.
Some critics object to federal taxation on the grounds that the House of
Representatives is not large enough to represent all the different classes of
citizens, and therefore, taxation will be class-biased. The idea of a
representative body comprised of delegates from each occupation is entirely
visionary and unrealistic, and not likely to occur. The mechanics and
manufacturers are more likely to select a merchant than one of their own kind
because despite their confidence in their own abilities, they know that the
merchant class will better serve their interests.
If the votes of the people are free, they will never vote in such a way that
each of their occupations and class is represented. The government will be
composed of merchants, learned professions and land holders -- each reflecting
the interests of the group it represents, and the learned professions serving as
arbiter. The nature of re-election insures that the representative acts in a way
to represent his constituents, regardless of their class or occupation.
The delegates who understand the principles of taxation the best will design the
most productive systems of taxation. Let each citizen be the judge of who he
thinks the most qualified person with an understanding of taxation is.
Commentary
The most heralded quote from the American
Revolution was "no taxation without
representation." By the time the people of the country began the business of
devising a plan for their own self-government, this quote had been altered to
imply no taxation by a strong central government, period. Unfortunately, the
inability of the central government to levy taxes under the Articles of
Confederation was one of the biggest weaknesses, and was changed by the
new plan of government.
American colonists received an awful shock in the aftermath of the French and
Indian War when the King and
Parliament not only began to regulate their affairs more closely than ever, but
also raised taxes on the colonists to assist in paying the war debts. Colonists
reacted violently against the Sugar Act, the
Stamp Act, the Townshend
Acts and others because as British citizens
they believed that taxes could only be levied on them through a body that
included their representation.
Parliament had the power of the purse over British citizens living in England,
but no representative of the colonies sat in Parliament. Colonists were being
taxed without their authority and this was a terrible abuse of their rights in a
representative government.
It is no surprise then, that in the Articles of Confederation, the
Confederation Congress is restricted from levying taxes of any kind. The people
felt they could only be fairly taxed by a representative government close to
home, namely in their state government. Their refusal to empower the central
government with the authority to raise its own revenue nearly crippled the war
effort and destroyed the viability of the confederacy.
During the American Revolution, soldiers became nearly mutinous on at least two
occasions, during the Newburgh Conspiracy and when they forced Congress to flee
from Philadelphia to Princeton. Both incidents rested on soldiers' frustrations
with not being paid. And, in both cases, the congress was unable to do anything
about it. Subject to the contributions of individual states for its source of
revenue, Congress had no control over its budget and could not effectively plan
for its expenses.
The financial situation worsened after the war ended and individual states saw
little need to continue to supply the Confederation Congress with additional
revenue. But, without the power to tax the Congress was unable to carry out its
other duties that included repayment of debts and continued support of the
common defense. These weaknesses threatened not only the physical security of
the nation, but the financial security and public credit of the nation as well.
The U.S. Constitution marks a return to the idea expressed prior to
the Revolution about taxation and representation. Instead of prohibiting a
strong central government from levying taxes, the Constitution places the power
of taxation strongly in the hands of the branch of the central government that
is closest to the people. The justification is that as representatives of the
people, Congress will naturally guard against unfair taxation. Furthermore by
allowing both the state and the federal government to levy taxes, each retains
its own authority to establish a budget and determine spending based on its own
needs.
