Concerning the General Power of Taxation
From the New York Packet.
Friday, December 28, 1787.

Author: Alexander Hamilton

To the People of the State of New York:

IT HAS been already observed that the federal government ought to possess the power of providing for the support of the national forces; in which proposition was intended to be included the expense of raising troops, of building and equipping fleets, and all other expenses in any wise connected with military arrangements and operations. But these are not the only objects to which the jurisdiction of the Union, in respect to revenue, must necessarily be empowered to extend. It must embrace a provision for the support of the national civil list; for the payment of the national debts contracted, or that may be contracted; and, in general, for all those matters which will call for disbursements out of the national treasury. The conclusion is, that there must be interwoven, in the frame of the government, a general power of taxation, in one shape or another.

Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution. From a deficiency in this particular, one of two evils must ensue; either the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants, or the government must sink into a fatal atrophy, and, in a short course of time, perish.

In the Ottoman or Turkish empire, the sovereign, though in other respects absolute master of the lives and fortunes of his subjects, has no right to impose a new tax. The consequence is that he permits the bashaws or governors of provinces to pillage the people without mercy; and, in turn, squeezes out of them the sums of which he stands in need, to satisfy his own exigencies and those of the state. In America, from a like cause, the government of the Union has gradually dwindled into a state of decay, approaching nearly to annihilation. Who can doubt, that the happiness of the people in both countries would be promoted by competent authorities in the proper hands, to provide the revenues which the necessities of the public might require?

The present Confederation, feeble as it is intended to repose in the United States, an unlimited power of providing for the pecuniary wants of the Union. But proceeding upon an erroneous principle, it has been done in such a manner as entirely to have frustrated the intention. Congress, by the articles which compose that compact (as has already been stated), are authorized to ascertain and call for any sums of money necessary, in their judgment, to the service of the United States; and their requisitions, if conformable to the rule of apportionment, are in every constitutional sense obligatory upon the States. These have no right to question the propriety of the demand; no discretion beyond that of devising the ways and means of furnishing the sums demanded. But though this be strictly and truly the case; though the assumption of such a right would be an infringement of the articles of Union; though it may seldom or never have been avowedly claimed, yet in practice it has been constantly exercised, and would continue to be so, as long as the revenues of the Confederacy should remain dependent on the intermediate agency of its members. What the consequences of this system have been, is within the knowledge of every man the least conversant in our public affairs, and has been amply unfolded in different parts of these inquiries. It is this which has chiefly contributed to reduce us to a situation, which affords ample cause both of mortification to ourselves, and of triumph to our enemies.

What remedy can there be for this situation, but in a change of the system which has produced it in a change of the fallacious and delusive system of quotas and requisitions? What substitute can there be imagined 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? Ingenious men may declaim with plausibility on any subject; but no human ingenuity can point out any other expedient to rescue us from the inconveniences and embarrassments naturally resulting from defective supplies of the public treasury.

The more intelligent adversaries of the new Constitution admit the force of this reasoning; but they qualify their admission by a distinction between what they call INTERNAL and EXTERNAL taxation. The former they would reserve to the State governments; the latter, which they explain into commercial imposts, or rather duties on imported articles, they declare themselves willing to concede to the federal head. This distinction, however, would violate the maxim of good sense and sound policy, which dictates that every POWER ought to be in proportion to its OBJECT; and would still leave the general government in a kind of tutelage to the State governments, inconsistent with every idea of vigor or efficiency. Who can pretend that commercial imposts are, or would be, alone equal to the present and future exigencies of the Union? Taking into the account the existing debt, foreign and domestic, upon any plan of extinguishment which a man moderately impressed with the importance of public justice and public credit could approve, in addition to the establishments which all parties will acknowledge to be necessary, we could not reasonably flatter ourselves, that this resource alone, upon the most improved scale, would even suffice for its present necessities. Its future necessities admit not of calculation or limitation; and upon the principle, more than once adverted to, the power of making provision for them as they arise ought to be equally unconfined. I believe it may be regarded as a position warranted by the history of mankind, that, IN THE USUAL PROGRESS OF THINGS, THE NECESSITIES OF A NATION, IN EVERY STAGE OF ITS EXISTENCE, WILL BE FOUND AT LEAST EQUAL TO ITS RESOURCES.

To say that deficiencies may be provided for by requisitions upon the States, is on the one hand to acknowledge that this system cannot be depended upon, and on the other hand to depend upon it for every thing beyond a certain limit. Those who have carefully attended to its vices and deformities as they have been exhibited by experience or delineated in the course of these papers, must feel invincible repugnancy to trusting the national interests in any degree to its operation. Its inevitable tendency, whenever it is brought into activity, must be to enfeeble the Union, and sow the seeds of discord and contention between the federal head and its members, and between the members themselves. Can it be expected that the deficiencies would be better supplied in this mode than the total wants of the Union have heretofore been supplied in the same mode? It ought to be recollected that if less will be required from the States, they will have proportionably less means to answer the demand. If the opinions of those who contend for the distinction which has been mentioned were to be received as evidence of truth, one would be led to conclude that there was some known point in the economy of national affairs at which it would be safe to stop and to say: Thus far the ends of public happiness will be promoted by supplying the wants of government, and all beyond this is unworthy of our care or anxiety. How is it possible that a government half supplied and always necessitous, can fulfill the purposes of its institution, can provide for the security, advance the prosperity, or support the reputation of the commonwealth? How can it ever possess either energy or stability, dignity or credit, confidence at home or respectability abroad? How can its administration be any thing else than a succession of expedients temporizing, impotent, disgraceful? How will it be able to avoid a frequent sacrifice of its engagements to immediate necessity? How can it undertake or execute any liberal or enlarged plans of public good?

Let us attend to what would be the effects of this situation in the very first war in which we should happen to be engaged. We will presume, for argument’s sake, that the revenue arising from the impost duties answers the purposes of a provision for the public debt and of a peace establishment for the Union. Thus circumstanced, a war breaks out. What would be the probable conduct of the government in such an emergency? Taught by experience that proper dependence could not be placed on the success of requisitions, unable by its own authority to lay hold of fresh resources, and urged by considerations of national danger, would it not be driven to the expedient of diverting the funds already appropriated from their proper objects to the defense of the State? It is not easy to see how a step of this kind could be avoided; and if it should be taken, it is evident that it would prove the destruction of public credit at the very moment that it was becoming essential to the public safety. To imagine that at such a crisis credit might be dispensed with, would be the extreme of infatuation. In the modern system of war, nations the most wealthy are obliged to have recourse to large loans. A country so little opulent as ours must feel this necessity in a much stronger degree. But who would lend to a government that prefaced its overtures for borrowing by an act which demonstrated that no reliance could be placed on the steadiness of its measures for paying? The loans it might be able to procure would be as limited in their extent as burdensome in their conditions. They would be made upon the same principles that usurers commonly lend to bankrupt and fraudulent debtors, with a sparing hand and at enormous premiums.

It may perhaps be imagined that, from the scantiness of the resources of the country, the necessity of diverting the established funds in the case supposed would exist, though the national government should possess an unrestrained power of taxation. But two considerations will serve to quiet all apprehension on this head: one is, that we are sure the resources of the community, in their full extent, will be brought into activity for the benefit of the Union; the other is, that whatever deficiences there may be, can without difficulty be supplied by loans.

The power of creating new funds upon new objects of taxation, by its own authority, would enable the national government to borrow as far as its necessities might require. Foreigners, as well as the citizens of America, could then reasonably repose confidence in its engagements; but to depend upon a government that must itself depend upon thirteen other governments for the means of fulfilling its contracts, when once its situation is clearly understood, would require a degree of credulity not often to be met with in the pecuniary transactions of mankind, and little reconcilable with the usual sharp-sightedness of avarice.

Reflections of this kind may have trifling weight with men who hope to see realized in America the halcyon scenes of the poetic or fabulous age; but to those who believe we are likely to experience a common portion of the vicissitudes and calamities which have fallen to the lot of other nations, they must appear entitled to serious attention. Such men must behold the actual situation of their country with painful solicitude, and deprecate the evils which ambition or revenge might, with too much facility, inflict upon it.


Guest Essayist: Joerg Knipprath, Professor of Law at Southwestern Law School

Article 1, Section 8, Clause 2

2:  To borrow Money on the credit of the United States;

Article I, Section 8, clause 2, confers on Congress the power to borrow money on the credit of the United States.  Borrowing is simply a means of raising revenue. One can glimpse the importance and ubiquity of this tool of public finance by the fact that the framers placed it as the second power granted to the new Congress.  Right after the powers to tax and spend. Those powers, along with the coining of money and punishing counterfeiting, constitute the federal revenue powers.

Borrowing on the credit of the United States was of vital concern during the Founding Era.  The difficulty that the U.S. had to finance the Revolutionary War impressed men such as Alexander Hamilton and his mentor in financial matters, Robert Morris.  It was the eventual success of John Adams and others in convincing the Dutch bankers to loosen their purse strings that opened access for Americans to international financial markets and contributed much to independence. Hamilton’s experience is reflected in Federalist 30, where he explains the importance of public credit to finance emergencies such as wars, and the connection between taxes (and, more broadly, responsible fiscal policies) and creditworthiness.

After the war, the economic plight of the United States worsened.  The war debts of the states and the United States posed a long-term threat to the country’s economic health. That condition, many feared, would inevitably turn into a political threat to the republican systems in the states and to the Confederation.  The fiscal and monetary policies of the states exacerbated the situation, as, in the words of James Madison’s in Federalist 10, a “rage for paper money, for an abolition of debts, for an equal division of property [and] for other improper [and] wicked projects” set in.  During the debates on the Constitution, Rhode Island was often (and not always entirely fairly) set up as a paradigm of bad economic policies run amok.  That is what happens when a state declines to show up for the debate, as Rhode Island opted to do.

But the problem was national and systemic, with the country locked in an apparent long-term cycle, or perhaps a spiral, of economic woe.  One problem, in the eyes of many, was the absence of banks.  The British had strongly disabled the formation of banks in the colonies, correctly seeing them as potential threats to British dominance. During the war, the Confederation’s Superintendent of Finance, Robert Morris, at the instigation of Alexander Hamilton, obtained a charter for the Bank of North America, an American prototype private national bank loosely patterned after the Bank of England.  The charter was immediately suspect, since the Articles of Confederation did not allow Congress to charter banks or other corporations.  As a precaution, the Bank eventually also obtained a state charter from Pennsylvania, a step that soon confirmed to Hamilton and other nationalists the folly of state control over public finance. The legislature of Pennsylvania, taking the position that it could, with impunity, take away vested property rights confirmed by a predecessor legislature, revoked the charter in 1785.

Though these constitutional weaknesses and political currents eventually caused the Bank of North America to fail as a national bank, the pattern was set. Indeed, Morris and Hamilton in their arguments to the Confederation Congress developed the constitutional arguments in favor of implied national powers that Hamilton would repeat in his push for the Bank of the United States in 1791, arguments the Supreme Court adopted in its landmark decision in McCulloch v. Maryland in 1819.

In the same vein, the economic and political arguments in favor of (and against) the Bank of North America would resonate in the political debates over the Bank of the United States and its successor until Andrew Jackson’s veto of the re-charter of the Second Bank of the United States in 1832.  Those same arguments would be repeated in the debate over the establishment of the Federal Reserve system and continue today.

While the Federal Reserve remains controversial in many quarters, the original Hamiltonian program probably saved the Republic.  Through the complex system Hamilton advanced as Secretary of the Treasury, the infirmities of the public debts of the United States and the states were eliminated by guaranteeing creditors payment on their previously depreciated securities.  A crucial step to restore confidence was to have the United States assume the war debts of the states.  The debt repayment was financed in part through an excise tax on whiskey that, while unpopular in certain quarters, was generally supported by the public.  The Bank of the United States was the final piece in Hamilton’s mosaic and would serve as a depository for government funds.  The use of those funds as well as the profit from private loans to other (state-chartered) banks and to large commercial borrowers would provide a return on their investment to private investors and to the government.  The latter could use those profits to help repay the war debts and to furnish internal public infrastructure improvements (later reflected in Henry Clay’s “American system”).  More significantly for the stability of public credit and the money supply was that the Bank could control the terms of credit it extended to borrowers. By selecting the interest rates for loans and having the option to demand repayment of loans in specie, it could temper the enthusiasm that state banks otherwise might have to overextend themselves through the issuance of bills of credit (paper bank notes).

As a result, the U.S. almost overnight gained access to the Amsterdam financial markets and, hence, to the world. Foreign capital flowed into the United States to help develop manufactures and commerce and put the United States on the road to a modern economy and prosperity.  Hamilton was not naive.  Despite what some of the agrarian anti-Bank theorists, such as Virginia’s Senator John Taylor of Caroline (a man who considered Jefferson and Madison sell-outs of the republican cause), claimed, neither the Bank nor Hamilton was bent on destroying American liberty.  Hamilton feared a government-controlled bank, but thought that the private control of the bank would keep corrupt political forces at bay.  Similarly, public and private tendencies towards credit bubbles would be constrained by two things.  First, the interests of investors and directors in safety as well as profits would make them sufficiently conservative. Second, he proposed that repayment of long-term public debt be immediately secured through a commitment of designated revenue to pay interest and principal (“sinking fund”).  Hamilton insisted that the Latin root of credit, credere (“to believe”), reflected the true source of credit.  “States, like individuals, who observe their engagements, are respected and trusted: while the reverse is the fate of those, who pursue an opposite conduct.”  While the states and the Confederation had abdicated their responsibilities and the country had suffered accordingly, Hamilton believed that his program lessened those dangers.

In practice, regrettably, Hamilton’s cautious and balanced approach has been cast aside. The only measure today appears to be how much can be borrowed on the increasingly suspect credit of the United States, rated as it is on the perceived ability of Americans to pay and the country’s status as the still safer haven for international funds than are the bonds of other countries.  Debt is rolled over, not retired, as more debt is added.

I happened to come across a book written fewer than forty years ago. The author recounted in horror that the gross national debt (not the annual deficit) topped the stratospheric level of $450 billion.  Even more scandalous to him was the explosion of the national debt from roughly $40 billion in 1940. Those are the kinds of numbers that today sound like unattainable frugality as a measure even of annual deficit, never mind as a measure of gross national debt. Even adjusted for inflation and population growth, the cumulative effect of the borrowing binge reflected in today’s debt is staggering compared to that time not so long ago.

Today’s questionable fiscal and monetary policies are not novel, of course.  The Lincoln administration’s massive borrowing and its manipulation of the currency is one stark early example.  FDR’s unilateral cancellation of gold clauses in public bonds (upheld by the Supreme Court in a stunning exercise of sophistry in Perry v. U.S. in 1935) and his comparatively massive, for that time, expansion of the debt, is another. But even those actions arguably were more defensible than today’s deficit borrowing. There is no massive war; the economic recession is not of the same degree; the borrowing is used to fund entitlements, not infrastructure.  Worse, the deficit is not a matter of a few years, but, by now, of generations.  It is structural. Worst of all, there is a lack of seriousness and urgency on the part of the political branches.  As Hamilton feared, that foundation of sound credit, the “belief” and confidence of creditors, is unlikely to be maintained in the teeth of such profligacy.

An expert on constitutional law, Prof. Joerg W. Knipprath has been interviewed by print and broadcast media on a number of related topics ranging from recent U.S. Supreme Court decisions to presidential succession. He has written opinion pieces and articles on business and securities law as well as constitutional issues, and has focused his more recent research on the effect of judicial review on the evolution of constitutional law. He has also spoken on business law and contemporary constitutional issues before professional and community forums.  Read more from Professor Knipprath at: .

Tuesday, June 8th, 2010

Howdy from NYC! Today Cathy, Juliette and I had a very successful day promoting Constituting America! It is such a joy to promote the United States Constitution and the brilliant Federalist Papers. We were on Glenn Beck’s radio show this morning and then on Megyn Kelly’s show on Fox News this afternoon. Check out the links on our Facebook sites to view and they will be up on our site shortly.

How lucky we are to be able to study these great works together and I thank Janice R. Brenman for her wonderful insights today on Federalist Paper No. 30! I am also thrilled that we have many new bloggers today. Join us today and visit our archives if you desire to reflect upon our essays from the past 35 days.

There were, once again, many powerful and relevant points made in Federalist Paper No. 30 by Alexander Hamilton.

“I believe it may be regarded as a position, warranted by the history of mankind, that in the usual progress of things, the necessities of a nation, in every stage of its existence, will be found at least equal to its resources.”

The relevancy for America, and Americans, today is obviously our tremendous debt. We have built a huge conglomerate of necessities that are certainly not equal to our resources. This statement serves as a warning to us.

We have accumulated so much debt that our liberty cannot be sustained.

Another quote from Alexander Hamilton echoes our current dilemma.

“But who would lend to a government, that prefaced its overtures for borrowing by an act that demonstrated that no reliance could be placed on the steadiness of its measures for paying.”

What happens when we are so in debt that we cannot repay our lenders, such as China? What happens when we cannot pay our bills or even borrow money because we have “demonstrated that no reliance could be placed on the steadiness of its measures for paying.”

It is easy to spend other people’s money. This is what many of our Congressman and Representatives are doing. They are spending our money with absolutely no regard as to how it will be repaid – long after they are out of office. Our massive expenditures and social programs have no financial foundation.

May Alexander Hamilton’s dream not vanish, the “..hope to see the halcyon scenes of the poetic or fabulous age realized in America..”

God Bless,

Janine Turner


Guest Blogger: Attorney Janice R. Brenman

Tuesday, June 8th, 2010

Alexander Hamilton is widely known as the first Secretary of the Treasury, and one of the strongest advocates of our Constitution.  Born illegitimately in the Caribbean to a Scottish merchant father and a mother of French Huguenot descent, he was already managing the affairs of an accounting office by age 15.  After penning an essay in French detailing the devastation from a local hurricane, Hamilton was offered educational opportunities in the new, promising American colonies.  He volunteered with a local militia, and became an aide to General Washington during the Revolutionary War.  Afterward, Hamilton began an expansive career as a lawyer and political activist.  One of his most enduring achievements was authoring many of The Federalist Papers (originally known as, The Federalist), a series of manifestos advocating the ratification of the United States Constitution.

To maintain anonymity, Hamilton, along with co-authors James Madison and John Jay, used the pseudonym “Publius” (after famed Roman Empire consul) to publish articles in three prominent New York newspapers, and later in bound volumes.  These articles reflect Hamilton’s enthusiasm for the new American country and his sharp mental abilities.  His death, via a duel with political rival Aaron Burr, was the final touch on a life filled with vigorous advocacy in the public policy arena with a special focus on promoting a strong national government for the United States.

Federalist Paper #30, “Concerning the General Power of Taxation.” is perhaps Hamilton at his finest.  Hamilton begins by explaining that the National Treasury exists to subsidize a wide range of legitimate pursuits of the federal government.  The Articles of Confederation gave Congress responsibility for managing needs of the confederacy, yet did not provide the means to do so.

Herein lies the function of taxation – a system by which all citizens have a stake in balancing benefits and costs afforded by a federal government positioned to furnish a functioning army, paying government employees, repaying current and future national debts, and other appropriate expenses.  He posited that a government cannot function absent some taxes, and its power to collect taxes among the populace is necessary.  Without taxes, the people would be plundered as a substitute for legitimate taxation, or, the government would eventually perish.

Hamilton delves into what many of his contemporaries saw as a substantive controversy:  internal and external taxation by the new federal government.  Hamilton explains the difference between an external tax and an internal tax, and then describes how the federal government should be responsible for both.  An external tax is a custom duty levied against any item coming into a colony to raise revenue – for example, a piece of machinery made in England. The duty is paid by the shipper and passed on to the consumer, in the form of a higher price for that machinery.  An internal tax is unrelated to imports or exports.  The Stamp Tax in England set an example – an excise tax imposed on stamped paper for legal documents (including licenses and permits), bills of lading, pamphlets and newspapers.  Therefore, the price of a newspaper included the cost of the stamp placed on the paper as the tax.

Critics of the new Constitution charged that internal taxation should be used exclusively by the State governments and external taxation reserved for the federal government.  Hamilton noted this ideal to be “romantic poetry” and that external taxes alone, on items such as commercial imports, cannot provide enough revenue for a government as extensive as the one proposed, especially in times of war.  Disallowing the federal government from internal taxation violates the maxim of good sense and sound policy he argues.  Essentially, critics claim internal taxation should be the sole authority of local government, and trade revenues should go to the federal government. This policy, however, not only subordinates the federal government, but also forces it to rely on states for security and prosperity of the nation as a whole.  Eventually, the Union would weaken and create conflict between the federal and state government, and perhaps even between the states themselves.

This conflict becomes even more evident during wartime.  The United States was in its infancy, thus capital reserves minimal.  The federal government could not depend on State requisitions alone – a loan would be needed for even the wealthiest of nations since no government would extend credit to the United States absent a reliable method of debt repayment.  Dependence on the states, which might not prove reliable, would force the federal government to seek loans in the private markets essentially subsidizing loan sharks that would charge the new government high interest rates.  For any other national emergency, some might fear funds allocated via taxation would be diverted, even if the national government has the unrestrained power of taxation.

However, two considerations will quiet these fears: (1) during a crisis the full resources of the community will be used for the benefit of the Union; and, (2) deficiencies can be supplied by loans.  Thus, Hamilton argues for a federal internal tax as well as an external federal tax.

Special thanks should be given to a myriad of sources (including Mary E. Webster) with regard to translating the complex lexicon of Chancery Standard used in the Papers into modern English.

Ms. Janice R. Brenman is a former prosecutor now in private practice in Los Angeles. She has commented in major legal publications on the subject of legal reform and celebrity influence on the legal system. She has also appeared in medical malpractice, products liability and complex civil litigation, and is well versed in all forms of discovery.  From 1999 to 2000 Ms. Brenman was a City Prosecutor and Community Preservationist. She clerked for the Honorable Rupert J. Groh, Jr., of the United States District Court for the Central District of California. Ms. Brenman also worked researching, writing and editing under a Nobel Prize winning laureate.

22 Responses to “June 8, 2010Federalist No. 30Concerning the General Power of Taxation, From the New York PacketGuest Blogger: Attorney Janice R. Brenman

  1. Dave says:

    “Revenue . . . must be had at all events.”—Hamilton No.12

    “Money is, with propriety, considered as the vital principle of the body politic; as that which sustains its life and motion, and enables it to perform its most essential functions. A complete power, therefore, to procure a regular and adequate supply of it, as far as the resources of the community will permit, may be regarded as an indispensable ingredient in every constitution.”—Hamilton No. 30

    Okay, okay, I get it—the general government needs a dependable and sufficient supply of money. The questions remain: For what purpose and from whom? And most importantly, how is the federal government going to be restrained from taking too much from the citizens?

    According to Hamilton, the proper check on government taxing is the limit of the “resources of the community.” That’s great if you get to spend other people’s money by becoming the first Treasury Secretary under the new Constitution. It’s not so great in the early years of the 21st century given that, in the last 80 years or so, the federal government has increased its share of the GDP by about 25 times.

    I wish I could go back in time and knock some sense into the good Colonel. With the benefit of hindsight and that oracle of wisdom, experience, we all know that the federal government has an insatiable appetite for citizens’ hard-earned dollars—it never has stopped, and it never will stop, at simply taking money for only those necessary, enumerated objects. One need only review a random sampling of the earmarks (bribes) in any recent legislative monstrosity to discover the government will redistribute our money for just about any project here at home or even abroad.

    What’s happening to various countries in the EU should be a cautionary tale for Americans. The problem countries got in their current situation by the same big-government formula our current administration seems to be adopting: Tax and spend, tax and spend, borrow and spend, borrow and spend . . . . The end is not good—worthless dollars in Americans’ pockets and shared misery for all but the various elite groups. And every aspect of the everyday life of Americans (and now with ObamaCare, the manner and time of our deaths also) will be under government control.


    George Will has a good piece on the Limitless Welfare State:

  2. Susan Craig says:

    Granted that taxes are a necessary evil where it went off the rails is that we allowed the situation where people were able to vote themselves other peoples money.

  3. So much to wrap the brain around!! Again, as I read each paper the clarity of how far this country has moved from the outlining principles over the years is amazing…and I thought most of our politicians were contitutional lawyers/professors! The intended use of taxation has been mutated, leaders manipulate the English language to justify their encroachment into the private sector and individuals.

    BUT…I read ahead Federalist 31 this morning and without spilling the beans, there is a fabulous point made. One that we’ve all heard before and one that is in full action mode across the country!!

  4. Kurt says:


    I think your argument just underscores how we as citizens need to stay involved and monitor our government. When they get out of hand, kick them out of office. I think many of the founding fathers views where predicated on the idea that the citizenry would cherish their freedoms/rights and would jealously protect them. My reading of their writings show quite a distrust of government. We were expected to constantly question and limit what it does, we are the ones to decide the limit of the resources of the community not government. Do you allow the employee to decide his own pay or do you set it?

    I imagine they would be shocked, dumbfounded and maybe even disgusted at the state of the citizenry’s protection of its rights today – just give us some government cheese and we’ll go back to sleep.

  5. W. B. Neate says:

    Ms. Brenman in the first sentence of paragraph #4, “Herein lies the function of taxation – a system by which all citizens have a stake in balancing benefits and costs afforded by a federal government …..,” highlights what has been lost in our system of taxation. No longer do “all citizens have a stake.” Not only do nearly 1/2 of our citizens pay no federal income tax, but a large and growing portion of this group are recipients of government/taxpayer subsidies. Most sadly these subsidies, along with much of our government spending, come from borrowed funds. I am fearful that this may become a voting block too large to overcome.

    Our system of taxation has morphed from a means of “balancing benefits and costs of government” to a means of social/economic engineering. In large measure the left uses the system to pander to the masses and the right uses it to curry favor with big business. Regrettably I can’t remember who said it but early in the last century it was said that Democracy will fail when the elected realize they can bribe the electorate with their own money. Well, I think they long ago figured it out.

    Survival of life in America as we have known it requires our returning to our founding roots of truly limited government and a method of taxation less susceptible to misuse. Surely the time has come for a Flat or Fair tax. If only we could elect statesmen, rather than politicians, to step up to the plate, make the tough, unpopular decisions and lead with boldness.

  6. Ron Meier says:

    “How can it undertake or execute any liberal or enlarged plans of public good?” This is the essence of the problem today – a definitional problem. The left argues that the “public good” is far more expansive than the right believes it to be. Until we come to grips with and fully understand just how wide and deep the “public good” should be allowed to be, we will not get off the track we’ve been on since FDR’s time. We are arguing this today, but we have not yet reached the crisis stage. History demonstrates that problems are not really addressed until the crisis bubble is pricked by some outside third party (e.g., China refusing to buy more of our bonds). Our legislators are like real estate bankers who will continue to loan money as long as it’s available long after their rational brain tells them that the ending will be ugly. We now know the ending will be ugly, but it’s business as usual in Washington, DC.

  7. Michael says:

    There is wide space to debate what is important to national security. To the extreme, we’ve seen national interest used to justify globalism, i.e., all nations must be intricately woven economically to prevent wars, save the environment, distribute resources most efficiently, etc. The debate has gradually pushed us to where we now finance the defense of other nations, fund wars to defend/install democratic societies, bailout state governments and private enterprises, and so on. There is now a huge federal bureaucracy engaged in nothing more than enforcing and collecting the federal income tax. As many early Americans feared, the power of taxation has helped to create the monster that now paradoxically dictates how we live and pursue happiness (and if we should live) under the guise of protecting us. The monster is now attacking wealth-makers and producers and will see its money supply drastically diminished as a result. This seems to be purposeful and intended to destroy our great nation.

  8. Carolyn Attaway says:

    The words Hamilton wrote to promote the need for a general power of taxation were meant to reassure the citizens of his time of a responsible government. However, when read today, during a time of high national debt and undisciplined spending, these words tend to leave a sour taste in my mouth.

    Two statements in particular sent an aversion through me as we tackle present day events, and rereading Hamilton’s words, I wonder if the Founders even envisioned such abuse to our tax system.

    Hamilton writes “Thus far the ends of public happiness will be promoted by supplying the wants of government, and all beyond this is unworthy of our care or anxiety. How is it possible that a government half supplied and always necessitous, can fulfill the purposes of its institution, can provide for the security, advance the prosperity, or support the reputation of the commonwealth? How can it ever possess either energy or stability, dignity or credit, confidence at home or respectability abroad? How can its administration be any thing else than a succession of expedients temporizing, impotent, disgraceful? How will it be able to avoid a frequent sacrifice of its engagements to immediate necessity? How can it undertake or execute any liberal or enlarged plans of public good?”

    This first statement tends to have been twisted over time to such a degree that today a large number of citizens feel that it is the government’s job to ensure their needs are met and their pursuits are guaranteed. Many people today do not even make the connection between their taxes and what the government can spend. I believe it was a mistake to begin the practice of taking owed taxes out of paychecks. Americans should all have to pay their taxes at the end of the year by writing a check to the government. I think that would be a major wake up call.

    The second statement is “The power of creating new funds upon new objects of taxation, by its own authority, would enable the national government to borrow as far as its necessities might require.”

    Again, I find this logic to have grown out of hand and explode our national debt to a point where recent polls show the same number of citizens that worry about our national debt equals that of those who worry about our national security. Whereas Hamilton was concerned about our national security, and the need to have funds to supply a defense against invasion; today Congress has taxed companies and citizens to such a high degree that is has become a national security problem.

    @ W.B. Neate – It was alarming to read the statistics earlier this year that the number of those receiving government entitlements was larger than those paying taxes. And to top it off, over the past 1 ½ years the number in government jobs grew at a larger pace than private sector jobs.

    There is a great article in the National Review today by Senator DeMint entitled “Constitution of No”. It is a great read! I highly recommend it.

  9. Mary says:

    I understand what Hamilton is saying, and totally agree that the federal government has need of the right for taxation in order to fund the defense and other things that are for “the benefit of the Union.” However, it is everything in that latter category that muddies the waters. “For the benefit of the Union” is totally subjective and takes us into the chaos that we are experiencing now. According to one side, the benefit of the Union is served if the government levies taxes and then spends tax money to feed and house people with low-paying jobs. The other side argues that the good of the Union is served by using that tax money to give credits to companies who can then create jobs for those same people. The elephant in the room is that neither option is the job of the government and has nothing to do with the benefit of the Union as a whole. It only directly benefits certain members of the Union with the hope that it will somehow benefit all. In other words, the tax money is neither needed nor used correctly.

    I had to laugh at Hamilton’s rhetorical question: “But who would lend to a government that prefaced its overtures for borrowing, by an act which demonstrated that no reliance could be placed on the steadiness of its measures for paying?” Can we say, “CHINA!!?” We have demonstrated all of the above and still the money comes flowing in as we spend, spend, spend.

    Finally, Hamilton states: “But two considerations will serve to quiet all apprehension on this head; one is that we are sure the resources of the community in their full extent, will be brought into activity for the benefit of the Union (addressed above); the other is, that whatever deficiencies there may be, can without difficulty be supplied by loans.” The ease of borrowing ALWAYS gets individuals, corporations and countries in trouble. If borrowing is difficult, spending is kept down. To me, Hamilton’s argument lacks the establishment of any kind of boundaries on either taxation or procurement of loans. If there is no boundary on the latter, then there can be no boundary on the former.

    It is rather ironic that this man, so supportive of a strong federal government that could borrow money whenever deemed necessary, had to resign from his position as Secretary of the Treasury because of financial problems of his own. According to World Book, it is because of his views that totally clashed with those of Jefferson and Madison, that the definition of two separate political parties formed and Hamilton led the Federalist Party that favored big government. He was the original liberal progressive!!

  10. Barb Zakszewski says:

    It is very obvious from this next section of the Federalist, dealing with taxation, how much Hamilton supported a very strong Federal government and how much he distrusts the States. He seems to dismiss the arguments from the “anti-federalists” that the Federal government, with almost unrestrained powers of taxation, could become abusive of its citizens…Fast forward 230 years, huh? Still, I do believe he had the best interests of the country at heart, and could not possibly foresee what would happen today…with the confiscatory nature of taxes both at the Federal, state and local levels. I’m not sure if he just did not want to believe that something like that could happen, of if he was just too naive in this particular matter. There was a post from earlier today where the person asked, how is the Federal government going to be restrained from taking too much from its citizens…I did not see an answer in the Federalist up to this point, and I believe we have already crossed that point, witness the TEA parties of today.

  11. […] of Chancery Standard used in the Papers into modern English.  Click here to access the post Constituting America Bookmark […]

  12. Ray Decker says:

    Until we repeal the 16th and 17th amendments and the Federal Reserve Act (which isn’t Federal and has no reserves) and abolish the Internal Revenue Service we will never get control back from the Federal leviathon. The income tax is what gives the Federal Government its massive power.

  13. It would seem to me personally that the majority of the ordinary citizen is not at all worse off in comparison with the genuine American federal government though the fed government can get to execute by some other laws. The governing administration can potentially manage their debt by publishing moolah and their debt deal techniques are helped by simply the number one military on the planet.

  14. Susan Craig says:

    @Kimi, yes the ordinary citizen will be harmed by the indiscriminate publishing of moolah! This is what the Weimar Republic did to try and manage Germany’s debt from World War I. Part of what brought the National Socialists to power was that ordinary citizens needed a wheelbarrow of ‘published moolah’ to purchase a loaf of bread and milk.

  15. Maggie says:

    Kimi….when money is just indiscriminently published it makes the value of said money (and that already in existence) worthless. Monetary value needs to be based on something tangible…ie…gold. If the government floods the market with “new” currency, the money you already have becomes devalued.

  16. Darren Le Montree says:

    Nice piece. As expressed in the comments above, it seems well accepted that the federal government needs taxes in order to function. The rub lies in the questions of how much and from whom. The extreme liberals want to drove out innovation and turn the taxation system into a social engineering mechanism (basically the fine job done by Europe). Whereas, the conservatives would prefer to have all social programs disbanded, liquidate social security, eliminate medicare and all welfare and just let the poor people either grind away in angst or die. Neither way works which is why we have the modified system that we do—which swings from left and right of center like a pendulum with each election cycle. That being said, the current system is unsustainable fiscally because of internal and external forces—the aging of our population and the “flattening of the world” which means we are no longer a hegemic force able to continually grow our way out of the problem and the promises made decades ago are no longer feasible. In essence, the realities of the current state of affairs mean that we cannot have a “fair” taxation system under either model. When 1% of the people control 90% of the wealth, having the rich only pay what they would define as their “fair share” (flat tax) is folly. While expecting our slower growing economy to afford continually increasing debt or tax burdens to fund the ballooning social program obligations is equally impractical. With the system going broke as it is things can only get worse from the perspective of both the left and the right and will continue to get worse until there is some genuine problem solving versus the spin game that has overwhelmed politics in the modern era.

  17. Doris Jean says:

    Taxing should be extremely limited and should never exceed ten percent. People should get together locally and pay for local parks, schools, police, etc. The politicians pay themselves too much money and their salaries are too high.

  18. Debbie Bridges says:

    @Darren “When 1% of the people control 90% of the wealth, having the rich only pay what they would define as their “fair share” (flat tax) is folly.
    Federalist Paper 20 addresses this issue through what can only be called a Fair Tax in today’s language. “…by authorizing the national government to raise its own revenues in its own way. Imposts, excises, and in general, all duties upon articles of consumption may be compared to a fluid, which will in time find its level with the means of paying them. The amount to be contributed by each citizen will in a degree be at his own option, and can be regulated by an attention to his frugal: and private oppression may always be avoided by a judicious selection of objects proper for such impositions”.
    As to your other assertion; “Whereas, the conservatives would prefer to have all social programs disbanded, liquidate social security, eliminate medicare and all welfare and just let the poor people either grind away in angst or die. ”
    I know of no conservatives who want the poor to “grind away in angst or die”. What I am my fellow conservatives would like is for the poor (and I was formally of their ranks, although I am hardly rich now) to as said by Benjamin Franklin, learn to fish as opposed to being given the fish time and time again. That is the biggest issue we have is that our government has made our citizens dependent on the government through entitlements. If someone is in need of assistance it should come from family, friends, church, and their local community. Government should be the absolute last resort used and only in times of true emergency.

  19. Darren writes: “Whereas, the conservatives would prefer to have all social programs disbanded, liquidate social security, eliminate medicare and all welfare and just let the poor people either grind away in angst or die.”

    This is simply patent nonsense, and it’s a Progressive calumny without foundation. A conservative desire not to create or facilitate a welfare state cannot be seen to imply that conservatives, or Libertarians, want people to die in the streets from starvation and disease.

    What Conservatives and Libertarians alike value is self-reliance and methods of public support of those truly in need that does not debilitate them and keep them in economic slavery, which is what the welfare state does.

    Moreover, I have no objection to requiring people to save for their retirement, but the giant Ponzi scheme of Social Security today, where the current working generation is burdened with supporting all the retirees still living is simple insanity. Conservatives want Social Security REFORM, and my vision of it is to put one’s contribution into a PRIVATE savings account that the federal government has NO ACCESS to, rather than giving it to the government to skim and waste.

    As for “1% controlling 90%” this is also nonsense. It’s what I call the Socialist Zero Sum Fallacy. This fallacy is based on the logical and rational error that Socialists make in assuming that in order for one person to acquire wealth, another person, or persons, must be oppressed and must give up wealth. It’s based on a deliberate misunderstanding of economics holding that there is a fixed supply of “wealth” and pouring it from one bucket into another advantages one person while depriving others.

    But it’s a lie, and a deliberate one at that. It’s all part of the propaganda of Progressivism.

    Any competent economist can tell you that the wealthiest people in the U.S. don’t keep their money under their mattresses, it’s constantly circulating and creating even more wealth for everyone, and for the nation. Wealth generates more wealth in nearly unlimited supply.

    It must also be noted that the wealthiest 1/10 of 1 percent of taxpayers pay more than 40 percent of the government’s income tax revenues, so to say they don’t pay enough is preposterous.

  20. Susan Craig says:

    I’m with Seth on this. If it was an across the board 10% not only would everybody (to quote our President) “have skin in the game” but also the so-called “evil rich” would still be paying a lions share of the revenue to the government. Just for arguments purpose say I earn $100 dollars a week and Darren earns $100,000 a week. I pay $10 and Darren pays $10,000 so the take is $10,010 government we each have a 10% stake in the game but Darren has provided over 99% of the revenue.
    As to the Social Services currently provided by big nanny Fed, one of the biggest complaints is that it is a one-size fits all program. I believe that it is more properly handled at the State and preferably the local level where people are more inclined and conversant to local immediate conditions.

  21. I believe I recall a guest on Beck who was explaining the Laffer Curve, sorry I can’t recall his name, saying that a flat tax of about 14 percent on every transaction would replace all other necessary government revenues. Not positive about this however. Perhaps there’s an economic expert out there who can comment.

    And you are absolutely correct that all social services should be dealt with at the state level, and that there is absolutely no need for the federal government to be involved except in the rare case where a particular state cannot meet it’s social services needs.

    But to have every bit of tax revenue sent to Washington, have 20 percent or more skimmed off the top to do nothing more than pay for federal bureaucrats who turn around and send it BACK to the very states they took it from in the first place is pure economic idiocy.

    It sometimes seems as if no one recognizes the fact that the vast majority of our tax money sent to Washington is not sent there to fund the legitimate functions of the federal government, it’s sent there to fund the political redistribution of that very same wealth back to the states, who have become dependent upon that federal largess to pay for all the unfunded mandates that the federal government imposes upon them using the carrot-and-stick method.

    If the states would simply say “no thanks” to the federal handouts, as Colorado Springs did recently, not only would the federal government lose legitimacy for it’s bureaucratic burdens, but the states would be freed from federal intervention. Much of the interference we suffer under from the Feds is caused by our own state legislatures knuckling under to conditional grants from the Feds. The biggest carrot they have is the federal highway system, which they use to coerce states into, for example, setting DUI standards and mandating seat belts.

    It’s all about politics, of course, because even state politicians have to bring home the federal pork, or so they believe, to get elected. They think (and probably correctly) that if they don’t do what the feds want and take the federal grants (extracted from us in the first place), state voters will be mad because some other state got a grant and they didn’t.

    Which makes it our fault for not ourselves demanding austerity and flight from the federal teat by our state legislatures. Weaning ourselves away from federal largess is the beginning of restoring our liberty from oppressive federal taxation.

  22. Susan Craig says:

    Seth, right again.