During the framing of the Constitution,
our founding fathers quarreled over many issues. The issue of taxation was no different.
The two main schools of thought, in regards to taxation, resided between
Federalists and anti-Federalist parties. Federalists pushed for national
authority over the power to tax, in addition to state proposals. Anti-Federalists
objected to federal authority to tax, feeling the power would be illiberally
abused.[1]
There were, however, issues in which the majority of the founding fathers
agreed upon. Contrary to today’s popular beliefs, many of the founding fathers
believed the poor should be taxed at a higher rate, in an attempt to motivate
them to work thus propelling them out of their poverty. Also conflicting with modern beliefs, they
felt those who worked should be taxed less heavily so as to remunerate them for
their endeavors: “To take from one, because it
is thought that his own industry and that of his fathers has acquired too much,
in order to spare to others, who, or whose fathers have not exercised equal
industry and skill, is to violate arbitrarily the first principle of
association.”[2] These
views are found in the founding fathers private papers as well as delineated
throughout the Constitution.
As previously mentioned, the amount of
power in which the Federal Government should be granted regarding taxes, was a
major altercation amid Federalist and anti-Federalist parties. To further
explain these viewpoints, however, one must first understand the difference
between external and internal taxation.
An external tax was a duty on any item which was being shipped to a
specific colony or state. The tax would be originally paid by the shipper, but
then imposed unto the item itself. This is known in present day terms as a
tariff. An internal tax, however, was a tax which was imposed directly upon an
item, such as a sales tax. The anti-Federalists made a clear distinction
between these two types of taxes, which they argued the Federalists grouped
into one category. Richard Henry Lee, a renowned anti-Federalist, argued that
external taxes were safe because their abuses were minimal and bounded. In
regards to internal taxation, he felt
the national government would gradually shift tax policy in order to favor
their personal prosperity.[3] He
explained: “…the power would be improperly lodged in congress, and that it
might be abused by imprudent and designing men.” Lee also questioned the authority of those in
power, and made arguments for the power to be left with the people. “Why give the power to the few, who, when
possessed of it, may have address enough to prevent the increase of
representation? Why not keep the power, and, when necessary, amend the
constitution”[4]
The Federalists tried the best they
could to compromise on the issues being voiced at the time. Alexander Hamilton directly addressed the issue
in the New York Packet writing:
“There
is a simple point of view in which this [tax
dispute] may be placed that must be altogether satisfactory. The national
legislature can make use of the system
of each state within that state. The method of laying and collecting taxes
in each State can, in all its parts, be adopted and employed by the federal government.”[5]
Hamilton felt the power should reside in the
Federal Government first, and then distributed throughout each state. Lee on
the other hand, believed the power should reside in the state first, and maintained
by the government. The preeminent argument of the Federalists remained in the
belief that one could have a ‘rule of the people’ through representation of the
government. Alexander Hamilton argued: “whether the representation of
the people be more or less numerous, it will consist almost entirely of
proprietors of land, of merchants, and of members of the learned professions,
who will truly represent all those different interests and views.” While authority cannot reside directly in the
hands of each individual, he believed that within a state, but both the state
and the individual are indirectly granted power by means of
representation.
In regards to the amount which one
should be taxed, Federalists, those in between, and even some anti-Federalists
all thought the like. If those who were out of work are taxed a low amount,
they would feel only a small need to try and get a job. If the taxes were
higher, ample enough to cause burdensome upon the individual, they would need
to find work in order to survive. This was the view of Thomas Jefferson, James
Madison, George Washington, John Adams, and Benjamin Franklin alike. While this seems an extreme position to take,
Benjamin Franklin argues:
I am for doing
good to the poor, but I differ in opinion of the means. -- I think the best way
of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. In my youth I travelled much,
and I observed in different countries, that the more public provisions were
made for the poor, the less they provided for themselves, and of course became
poorer. And, on the contrary, the less was done for them, the more they did for
themselves, and became richer.[6]
While the poor would clearly object to
higher taxes, Franklin argues that those poor who have harder initial burdens,
do better on average verses those having money given to them or deducted from
payments by a higher authority. Thus, clearly objecting to tax cuts and extreme
national help on low-income families.
When
it came down to the specific arguments that were made, Federalist and
anti-Federalists parties were not in disagreement of national verses no
national authority. Rather, what and how much power should be given to the
national authority in order to assure it would not be abused nor mistreated. Internal
Taxes were one of the issues which the anti-Federalists felt would be abused. Although
their opinions were different, the Founding Fathers were able to work together
and compromise on the issue of taxation. As can be seen by the wording of the
Constitution, which addresses the needs of both parties: “The Congress shall have Power to lay and collect Taxes,
Duties, Imposts and Excises…Representatives and direct taxes shall
be apportioned among the several States which may be included within this
Union, according to their respective numbers”[7]
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