The Same Subject Continued (No. 36)

Happy New Year! I'm back from my hiatus of article-writing, and now am ready to delight you once more, gentle readers, with the wonders of the Federalist Papers.

Tax, glorious tax! In Federalist 36, Hamilton continues the discussion of his favorite topic: revenue. Actually, he begins by continuing the previous discussion on class representation in the legislature. This, I believe, originally came up in the tax context because of the idea of taxes falling harder on one class of worker or another. Still, it makes the "same subject continued" headline a bit misleading. Expanding on his thoughts of last time, Hamilton finds the very idea impractical and stupid, noting that different kinds of merchants, for example, may be competitors with each other, rather than class compatriots. "But," as Hamilton says, "I forbear to dwell any longer on a matter which has hitherto worn too loose a garb to admit even of an accurate inspection of its real shape or tendency."

Returning to the specific issue of tax, Hamilton takes issue with the complaint that national taxes are unworkable, since they demand local knowledge in their collection, assessment, and what not. Hamilton says this argument is ridiculous -- the feds can hire local tax collectors as easily as the states can. Further, he says, the "national legislature can make use of the system of each state within that state. The method of laying and collecting this species of taxes in each State can, in all its parts, be adopted and employed by the federal government."

In the event, that didn't happen. Customs were collected by federal officials in a uniform, if corrupt, fashion. Excises, I believe, were collected by federal revenue agents. And income taxes, legal after the Sixteenth Amendment, are collected by a federal agency. But Hamilton's larger point is correct -- the system is not unworkable.

Hamilton also discusses two of the limits on federal taxing power, first concerning the fact that direct taxes can only be levied in proportion to population by state, and second, requiring that indirect taxes must be uniform throughout the United States. This distinction was largely overturned by the Sixteenth Amendment, and is too academic for a blog anyway. Hamilton's point was that the Constitution was drafted so that the Congress can't put all the tax on one area. That doesn't stop them from taxing one group or product more than others, as the Whiskey Rebels soon found out, but is does assure us that everyone can't decide to stick it to Rhode Island.