In Federalist Paper number 30, Hamilton turns to a topic that was as contentious in his day as it is in ours: taxation. I'll try to keep it brief; I can talk tax policy until the cows come home, but I know, gentle reader, that you have stuff to do.In order for a government to function, Hamilton writes, there must be "a general power of taxation, in one shape or another." Well, he has a point - even the smallest governments need money. One of the problems with the Articles of Confederation was that the federal government could not collect its own taxes. The feds could levy taxes, sure, but they had to ask for the states to give it to them. It might shock you to learn that states were not too happy when the feds asked them to kick in a little cash, and sometimes they didn't pay up.
This, Hamilton writes, is no way to run a country. "What substitute can there be imagined," he asks us, "for this ignis fatuus in finance, but that of permitting the national government to raise its own revenues by the ordinary methods of taxation authorized in every well-ordered constitution of civil government?" Indeed. And just to refute the libertarians of his time and ours, Hamilton spends a paragraph discussing the insufficiency of tariffs alone to fund the government. Damn, he's always one step ahead of us!
I'm with him so far, but then it starts to get weird. Hamilton further protests that even if it could be determined that tariffs were sufficient to fund the government now, how can we know that it won't need more money later? First he mentions wartime, and the difficulty of borrowing large sums. Then, he lets loose this gem: "How can it undertake or execute any liberal or enlarged plans of public good?" Whaaa? I thought that was the point of keeping taxes low -- to limit the power of government. To be fair, "liberal or enlarged plans of public good" in Hamilton's day meant building roads and lighthouses, and founding a bank to keep the government's gold in. He wasn't talking about creeping socialism, but there were certainly some in America in the 1780s who would view the two with equal horror. Anyhow, Hamilton is right, but for the wrong reasons. We need taxes, 'tis true, but not to the extent that the government can fund whatever it wants. After twenty-nine essays telling us how little and unobtrusive the federal government will be under the Constitution, with this one essay he just scared the bejeezus out of the Anti-Federalists again.
