The Same Subject Continued (No. 32)

In Federalist Paper number 32, Hamilton continues his discussion of the taxing power of the federal government. I guess Madison and Jay have left all the financial stuff to Hamilton, which makes sense, I suppose, but seems a bit unfair, as well. At any rate, Hamilton addressed the concern that this new taxing power would eliminate the states' own ability to tax.

Anti-federalists were apparently making noises that these new powers might be interpreted to mean that only the feds can tax. Nonsense, Hamilton says. Because the new Constitution "aims only at a partial union or consolidation, the State governments would clearly retain all the rights of sovereignty which they before had, and which were not, by that act, exclusively delegated to the United States." This important principle was reinforced in 1791 by the Tenth Amendment to the Constitution, and subsequently ignored by the Supreme Court in 1941. So for 153 years, Hamilton was correct -- the Constitution leaves to the states all those powers they already had, unless the Constitution specifically says otherwise, including the power to tax.

This all makes good logical sense, and is kind of the point of the provision. The Framers of the Constitution wanted free trade among the states, with no tariff barriers on goods travelling from state to state, and no variance among the states in tariffs on foreign goods. It's the sort of free-trade zone the EU has created among its member-states, but with a lot less regulation. So, Pennsylvania might tax liquor and gasoline more than New Jersey does (and they do) but Pennsylvania can't tax New Jersey liquor or Canadian liquor more than Pennsylvania liquor.

As an example, Hamilton cites the provision that prevents the states from taxing imports and exports without Congress's permission. Implicit in this prohibition, Hamilton says, is the idea that states can still tax things that aren't imports and exports. They can even tax imported goods once they're here, or exported goods before they leave, they just can use tariffs and taxes to discriminate between foreign and domestic goods; only the federal Congress may do that.

Where the Constitution is silent as to the states' right to tax, Hamilton says they have the same powers they've always had. Where both federal and state government are allowed to tax, both may do so. "It is, indeed, possible that a tax might be laid on a particular article by a State which might render it inexpedient that thus a further tax should be laid on the same article by the Union; but it would not imply a constitutional inability to impose a further tax."

The Same Subject Continued (No. 31)

Hey, friends, sorry for the long absence. Much of my writing time lately has been spent on a law review article that is, like Federalist 31, about tax. But don't worry: I haven't abandoned the Federalist Papers or my dozens of readers. We're going to see this Constitution explained in full, if it takes me 'til I retire.


Hamilton is the author again, and he starts this one off kind of strangely. He spends the first three paragraphs discussing the proposition that some things are so obviously true that they "command[] the assent of the mind." As you might expect, it is one such truths that Hamilton proposes to expound.


That "truth" is that the end justifies the means, or, more specifically, that if the government needs money it must have all legitimate means at its disposal to get it. "A government," he writes, "ought to contain in itself every power requisite to the full accomplishment of the objects committed to its care, and to the complete execution of the trusts for which it is responsible, free from every other control but a regard to the public good and to the sense of the people."


This is the stuff that gave anti-Federalists fits. When you say "every power," all they see is redcoats kicking in your door and drinking all your beer (or worse). Usually, Hamilton sees this coming, having fought against redcoats himself, and makes a plausible counter-argument.


This time, the argument is pretty feeble. You might think the Union has enough money now, Hamilton says, but you never know. Who knows now what national emergency might befall us in the future? There may be a legitimate need for boatloads of your money to be deposited in the federal treasury. And for those worried about the federal government becoming too powerful on account of all this money, Hamilton again tells his readers not to fret. "It should not be forgotten that a disposition in the State governments to encroach upon the rights of the Union is quite as probable as a disposition in the Union to encroach upon the rights of the State governments."


Ok, so he's dead wrong on this one. But even Hamilton could not have predicted the successes of the Marshall Court in striking down states' encroachment on federal power, any more than he could have predicted later Courts' failure to stop the federal government's encroachment upon the states' power. At the time he wrote Federalist 31, Hamilton was looking at strong state governments thumbing their noses at an anemic confederation that couldn't even cover its own bar bill. So, Hamilton was wrong here, but for the right reasons.