Power to Levy Direct Taxes
[11 June 1788]
Technically, Sections 1 and 2 of Article I of the Constitution were still under discussion. “We have sat eight days, [and] so little has been done,” George Nicholas complained, “that we have hardly begun to discuss the question regularly” (Robertson, Virginia Debates description begins David Robertson, Debates and Other Proceedings of the Convention of Virginia (2d ed.; Richmond, 1805). description ends , p. 173).
Mr. Madison. Mr. Chairman—It was my purpose to resume before now, what I had left unfinished, concerning the necessity of a radical change of our system. The intermission which has taken place, has discontinued the progress of the argument, and has given opportunity to others to advance arguments on different parts of the plan. I hope we shall steer our course in a different manner from what we have hitherto done. I presume that vague discourses and mere sports of fancy, not relative to the subject at all, are very improper on this interesting occasion. I hope these will be no longer attempted, but that we shall come to the point. I trust we shall not go out of order, but confine ourselves to the clause under consideration. I beg gentlemen would observe this rule. I shall endeavour not to depart from it myself.
The subject of direct taxation is perhaps one of the most important that can possibly engage our attention, or that can be involved in the discussion of this question. If it be to be judged by the comments made upon it, by the opposers and favorers of the proposed system, it requires a most clear and critical investigation. The objections against the exercise of this power by the general government as far as I am able to comprehend them, are founded upon the supposition of its being unnecessary, impracticable, unsafe and accumulative of expence. I shall therefore consider, 1st, how far it may be necessary; 2dly, how far it may be practicable; 3dly, how far it may be safe, as well with respect to the public liberty at large, as to the state legislatures; and 4thly, with respect to œconomy. First then, is it necessary? I must acknowledge that I concur in opinion with those gentlemen who told you that this branch of revenue was essential to the salvation of the union. It appears to me necessary, in order to secure that punctuality which is necessary in revenue matters. Without punctuality individuals will give it no confidence; without which it cannot get resources. I beg gentlemen to consider the situation of this country, if unhappily the government were to be deprived of this power. Let us suppose for a moment that one of those powers which may be unfriendly to us, should take advantage of our weakness, which they will be more ready to do when they know the want of this resource in our government. Suppose it should attack us, what forces could we oppose to it? Could we find safety in such forces as we could call out? Could we call forth a sufficient number, either by draughts, or any other way, to repel a powerful enemy? The inability of the government to raise and support regular troops, would compel us to depend on militia. It would be then necessary to give this power to the government, or run the risk of national annihilation. It is my firm belief, that if a hostile attack were made this moment on the United States, it would flash conviction on the minds of the citizens of the United States, of the necessity of vesting the government with this power, which alone can enable it to protect the community. I do not wish to frighten the members of this convention into a concession of this power, but to bring to their minds those considerations which demonstrate its necessity. If we were secured from the possibility, or the probability of danger, it might be unnecessary. I shall not review that concourse of dangers which may probably arise at remote periods of futurity, nor all those which we have immediately to apprehend, for this would lead me beyond the bounds which I prescribed myself. But I will mention one single consideration, drawn from fact itself. I hope to have your attention.
By the treaty between the United States and his most Christian majesty, among other things it is stipulated, that the great principle on which the armed neutrality in Europe was founded, should prevail in case of future wars. The principle is this, that free ships shall make free goods, and that vessels and goods shall be both free from condemnation.1 Great-Britain did not recognize it. While all Europe was against her, she held out without acceding to it. It has been considered for some time past, that the flames of war already kindled, would spread, and that France and England were likely to draw those swords which were so recently put up. This is judged probable. We should not be surprised in a short time, to consider ourselves as a neutral nation—France on one side, and Great-Britain on the other. What is the situation of America? She is remote from Europe, and ought not to engage in her politics or wars. The American vessels, if they can do it with advantage, may carry on the commerce of the contending nations. It is a source of wealth which we ought not to deny to our citizens. But, sir, is there not infinite danger, that in despite of all our caution we shall be drawn into the war? If American vessels have French property on board, Great-Britain will seize them. By this means we shall be obliged to relinquish the advantage of a neutral nation, or be engaged in a war. A neutral nation ought to be respectable, or else it will be insulted and attacked. America in her present impotent situation would run the risk of being drawn in as a party in the war, and lose the advantage of being neutral. Should it happen that the British fleet should be superior, have we not reason to conclude, from the spirit displayed by that nation to us and to all the world, that we should be insulted in our own ports, and our vessels seized? But if we be in a respectable situation—if it be known that our government can command the whole resources of the union, we shall be suffered to enjoy the great advantages of carrying on the commerce of the nations at war; for none of them would be willing to add us to the number of their enemies. I shall say no more on this point, there being others which merit your consideration.
The expedient proposed by the gentlemen opposed to this clause, is, that requisitions shall be made, and if not complied with in a certain time, that then taxation shall be recurred to. I am clearly convinced, that whenever requisitions shall be made, they will disappoint those who put their trust in them. One reason to prevent the concurrent exertions of all the states, will arise from the suspicion, in some states, of delinquency in others. States will be governed by the motives that actuate individuals.
When a tax law is in operation in a particular state, every citizen, if he knows of the energy of the laws to enforce payment, and that every other citizen is performing his duty, will chearfully discharge his duty; but were it known that the citizens of one district were not performing their duty, and that it was left to the policy of the government to make them come up with it, the citizens of the other districts would be very supine and careless in making provisions for payment. Our own experience makes the illustration more natural. If requisitions be made on thirteen different states, when one deliberates on the subject, she will know that all the rest will deliberate upon it also. This, sir, has been a principal cause of the inefficacy of requisitions heretofore, and will hereafter produce the same evil. If the legislatures are to deliberate on this subject, (and the honorable gentleman opposed to this clause, thinks their deliberation necessary) is it not presumable, that they will consider peculiar local circumstances? In the general council, on the contrary, the sense of all America would be drawn to a single point. The collective interest of the union at large, will be known and pursued. No local views will be permitted to operate against the general welfare. But when propositions would come before a particular state, there is every reason to believe, that qualifications of the requisitions would be proposed—compliance might be promised, and some instant remittances might be made. This will cause delays, which in the first instance will produce disappointment. This also will make failures every where else. This I hope will be considered with the attention it deserves. The public creditors will be disappointed, and more pressing. Requisitions will be made for purposes equally pervading all America; but the exertions to make compliances, will probably be not uniform in the states. If requisitions be made for future occasions; for putting the states in a state of military defence, or to repel an invasion, will the exertions be uniform and equal in all the states? Some parts of the United States are more exposed than others. Will the least exposed states exert themselves equally? We know that the most exposed will be more immediately interested, and will make less sacrifices in making exertions. I beg gentlemen to consider that this argument will apply with most effect to the states which are most defenceless and exposed. The southern states are most exposed, whether we consider their situation, or the smallness of their population. And there are other circumstances which render them still more vulnerable, which do not apply to the northern states. They are therefore more interested in giving the government a power to command the whole strength of the union in cases of emergency. Do not gentlemen conceive that this mode of obtaining supplies from the states, will keep alive animosities between the general government and particular states? Where the chances of failures are so numerous as thirteen, by the thirteen states, disappointment in the first place, and consequent animosity must inevitably take place.
Let us consider the alternatives proposed by gentlemen instead of the power of laying direct taxes. After the states shall have refused to comply, weigh the consequences of the exercise of this power by congress. When it comes in the form of a punishment, great clamours will be raised among the people against the government; hatred will be excited against it. It will be considered as an ignominious stigma on the state. It will be considered at least in this light by the state where the failure is made, and these sentiments will no doubt be diffused through the other states. Now let us consider the effect, if collectors are sent where the state governments refuse to comply with requisitions. It is too much the disposition of mankind not to stop at one violation of duty. I conceive that every requisition that will be made on any part of America, will kindle a contention between the delinquent member, and the general government. Is there no reason to suppose divisions in the government (for seldom does any thing pass with unanimity) on the subject of requisitions? The parts least exposed will oppose those measures which may be adopted for the defence of the weakest parts. Is there no reason to presume, that the representatives from the delinquent state will be more likely to foster disobedience to the requisitions of the government, than study to recommend them to the public?
There is, in my opinion, another point of view in which this alternative will produce great evil. I will suppose, what is very probable, that partial compliances will be made. A difficulty here arises which fully demonstrates its impolicy. If a part be paid, and the rest withheld, how is the general government to proceed? They are to impose a tax, but how shall it be done in this case? Are they to impose it by way of punishment, on those who have paid, as well as those who have not? All these considerations taken in view (for they are not visionary or fanciful speculations) will, perhaps, produce this consequence. The general government to avoid those disappointments which I first described, and to avoid the contentions and embarrassments which I last described, will, in all probability, throw the public burdens on those branches of revenue which will be more in their power. They will be continually necessitated to augment the imposts. If we throw a disproportion of the burdens on that side, shall we not discourage commerce, and suffer many political evils? Shall we not increase that disproportion on the southern states, which for some time will operate against us? The southern states, from having fewer manufactures, will import and consume more. They will therefore pay more of the imposts. The more commerce is burdened, the more the disproportion will operate against them. If direct taxation be mixed with other taxes, it will be in the power of the general government to lessen that inequality. But this inequality will be increased to the utmost extent, if the general government have not this power. There is another point of view in which this subject affords us instruction. The imports will decrease in time of war. The honorable gentleman who spoke yesterday, said, that the imposts would be so productive, that there would be no occasion of laying taxes. I will submit two observations to him and the committee. First: in time of war the imposts will be less; and as I hope we are considering a government for a perpetual duration, we ought to provide for every future contingency. At present our importations bear a full proportion to the full amount of our sales, and to the number of our inhabitants; but when we have inhabitants enough, our imports will decrease; and as the national demands will increase with our population, our resources will increase as our wants increase. The other consideration which I will submit on this part of the subject is this: I believe that it will be found in practice, that those who fix the public burthens, will feel a greater degree of responsibility when they are to impose them on the citizens immediately, than if they were to say what sum should be paid by the states. If they exceed the limits of propriety, universal discontent and clamour will arise. Let us suppose they were to collect the taxes from the citizens of America—would they not consider their circumstances? Would they not attentively consider what could be done by the citizens at large? Were they to exceed in their demands, what were reasonable burdens, the people would impute it to the right source, and look on the imposers as odious.
When I consider the nature of the various objections brought against this clause, I should be led to think, that the difficulties were such that gentlemen would not be able to get over them, and that the power, as defined in the plan of the convention, was impracticable. I shall trouble them with a few observations on that point.
It has been said that ten men deputed from this state, and others in proportion from other states, will not be able to adjust direct taxes so as to accommodate the various citizens in thirteen states.
I confess I do not see the force of this observation. Could not ten intelligent men, chosen from ten districts from this state, lay direct taxes on a few objects in the most judicious manner?2 It is to be conceived, that they would be acquainted with the situation of the different citizens of this country. Can any one divide this state into any ten districts so as not to contain men of sufficient information? Could not one man of knowledge be found in a district? When thus selected, will they not be able to carry their knowledge into the general council? I may say with great propriety, that the experience of our own legislature demonstrates the competency of congress to lay taxes wisely. Our assembly consists of considerably more than a hundred, yet from the nature of the business, it devolves on a much smaller number. It is through their sanction, approved of by all the others. It will be found that there are seldom more than ten men who rise to high information on this subject. Our federal representatives, as has been said by the gentleman (Mr. Marshall) who entered into the subject with a great deal of ability, will get information from the state governments. They will be perfectly well informed of the circumstances of the people of the different states, and the mode of taxation that would be most convenient for them, from the laws of the states. In laying taxes, they may even refer to the state systems of taxation. Let it not be forgotten, that there is a probability, that that ignorance which is complained of in some parts of America, will be continually diminishing. Let us compare the degree of knowledge which the people had in time past, to their present information. Does not our own experience teach us, that the people are better informed than they were a few years ago? The citizen of Georgia knows more now of the affairs of New-Hampshire, than he did before the revolution, of those of South-Carolina. When the representatives from the different states are collected together, to consider this subject, they will interchange their knowledge with one another, and will have the laws of each state on the table. Besides this, the intercourse of the states will be continually increasing. It is now much greater than before the revolution. My honorable friend over the way, (Mr. Monroe) yesterday, seemed to conceive, as an insuperable objection, that if land were made the particular object of taxation, it would be unjust, as it would exonerate the commercial part of the community—that if it were laid on trade, it would be unjust in discharging the landholders; and that any exclusive selection would be unequal and unfair. If the general government were tied down to one object, I confess the objection would have some force in it. But if this be not the case, it can have no weight. If it should have a general power of taxation, they could select the most proper objects, and distribute the taxes in such a manner, as that they should fall in a due degree on every member of the community. They will be limited to fix the proportion of each state, and they must raise it in the most convenient and satisfactory manner to the public.
The honorable member considered it as another insuperable objection, that uniform laws could not be made for thirteen states, and that dissonance would produce inconvenience and oppression. Perhaps it may not be found, on due enquiry, to be so impracticable as he supposes. But were it so, where is the evil of different laws operating in different states, to raise money for the general government? Where is the evil of such laws? There are instances in other countries, of different laws operating in different parts of the country, without producing any kind of oppression. The revenue-laws are different in England and Scotland in several respects. Their laws relating to custom, excises, and trade, are similar; but those respecting direct taxation are dissimilar. There is a land-tax in England, and a land-tax in Scotland, but the laws concerning them are not the same. It is much heavier in proportion in the former than in the latter. The mode of collection is different—yet this is not productive of any national inconvenience. Were we to conclude from the objections against the proposed plan, this dissimilarity, in that point alone, would have involved those kingdoms in difficulties. In England itself, there is a variety of different laws operating differently in different places.
I will make another observation on the objection of my honorable friend. He seemed to conclude, that concurrent collections under different authorities, were not reducible to practice. I agree that were they independent of the people, the argument would be good. But they must serve one common master. They must act in concert, or the defaulting party must bring on itself the resentment of the people. If the general government be so constructed, that it will not dare to impose such burdens, as will distress the people, where is the evil of its having a power of taxation concurrent with the states? The people would not support it, were it to impose oppressive burdens. Let me make one more comparison of the state governments to this plan. Do not the states impose taxes for local purposes? Does the concurrent collection of taxes, imposed by the legislatures for general purposes, and of levies laid by the counties for parochial and county purposes, produce any inconvenience or oppression? The collection of these taxes is perfectly practicable, and consistent with the views of both parties. The people at large are the common superior of the state governments, and the general government. It is reasonable to conclude, that they will avoid interferences for two causes—to avoid public oppression, and to render the collections more productive. I conceive they will be more likely to produce disputes, in rendering it convenient for the people, than run into interfering regulations.
In the third place I shall consider, whether the power of taxation to be given the general government be safe: and first, whether it be safe as to the public liberty in general. It would be sufficient to remark, that they are, because, I conceive, the point has been clearly established by more than one gentleman who has spoken on the same side of the question. In the decision of this question, it is of importance to examine, whether elections of representatives by great districts of freeholders be favorable to fidelity in representatives. The greatest degree of treachery in representatives, is to be apprehended where they are chosen by the least number of electors; because there is a greater facility of using undue influence, and because the electors must be less independent. This position is verified in the most unanswerable manner, in that country to which appeals are so often made, and sometimes instructively. Who are the most corrupt members in parliament? Are they not the inhabitants of small towns and districts? The supporters of liberty are from the great counties. Have we not seen that the representatives of the city of London, who are chosen by such thousands of voters, have continually studied and supported the liberties of the people, and opposed the corruption of the crown? We have seen continually that most of the members in the ministerial majority are drawn from small circumscribed districts. We may therefore conclude, that our representatives being chosen by such extensive districts, will be upright and independent. In proportion as we have security against corruption in representatives, we have security against corruption from every other quarter whatsoever.
I shall take a view of certain subjects which will lead to some reflections, to quiet the minds of those gentlemen who think that the individual governments will be swallowed up by the general government.3 In order to effect this, it is proper to compare the state governments to the general government with respect to reciprocal dependence, and with respect to the means they have of supporting themselves, or of encroaching on one another. At the first comparison we must be struck with these remarkable facts. The general government has not the appointment of a single branch of the individual governments, or of any officers within the states, to execute their laws. Are not the states integral parts of the general government? Is not the president chosen under the influence of the state legislatures? May we not suppose that he will be complaisant to those from whom he has his appointment, and from whom he must have his re-appointment? The senators are appointed altogether by the legislatures.
My honorable friend apprehended a coalition between the president, senate, and house of representatives, against the states. This could be supposed only from a similarity of the component parts.
A coalition is not likely to take place, because its component parts are heterogeneous in their nature. The house of representatives is not chosen by the state governments, but under the influence of those who compose the state legislature. Let us suppose ten men appointed to carry the government into effect; there is every degree of certainty, that they would be indebted for their re-election, to the members of the legislatures. If they derive their appointment from them, will they not execute their duty to them? Besides this, will not the people (whose predominant interest will ultimately prevail) feel great attachment to the state legislatures? They have the care of all local interests—those familiar domestic objects, for which men have the strongest predilection. The general government on the contrary, has the preservation of the aggregate interests of the union—objects, which being less familiar, and more remote from men’s notice, have a less powerful influence on their minds. Do we not see great and natural attachments arising from local considerations? This will be the case in a much stronger degree in the state governments, than in the general government. The people will be attached to their state legislatures from a thousand causes; and into whatever scale the people at large will throw themselves, that scale will preponderate. Did we not perceive in the early stages of the war, when congress was the idol of America, and when in pursuit of the object most dear to America, that they were attached to their states? Afterwards the whole current of their affection was to the states, and would be still the case, were it not for the alarming situation of America.
At one period of the congressional history, they had power to trample on the states. When they had that fund of paper money in their hands, and could carry on all their measures without any dependence on the states, was there any disposition to debase the state governments? All that municipal authority which was necessary to carry on the administration of the government, they still retained unimpaired. There was no attempt to diminish it.
I am led by what fell from my honorable friend yesterday to take this supposed combination in another view. Is it supposed, that the influence of the general government will facilitate a combination between the members? Is it supposed, that it will preponderate against that of the state governments? The means of influence consist in having the disposal of gifts and emoluments, and in the number of persons employed by, and dependent upon a government. Will any gentleman compare the number of persons, which will be employed in the general government, with the number of those which will be in the state governments? The number of dependants upon the state governments will be infinitely greater than those on the general government. I may say with truth, that there never was a more œconomical government in any age or country; nor which will require fewer hands, or give less influence.
Let us compare the members composing the legislative, executive and judicial powers in the general government, with those in the states, and let us take into view the vast number of persons employed in the states; from the chief officers to the lowest, we will find the scale preponderating so much in favor of the states, that while so many persons are attached to them, it will be impossible to turn the balance against them. There will be an irresistible bias towards the state governments. Consider the number of militia officers, the number of justices of the peace, the number of the members of the legislatures, and all the various officers for districts, towns and corporations, all intermixing with, and residing among the people at large. While this part of the community retains their affection to the state governments, I conceive that the fact will be, that the state governments, and not the general government, will preponderate. It cannot be contradicted that they have more extensive means of influence. I have my fears as well as the honorable gentleman—but my fears are on the other side. Experience, I think, will prove (though there be no infallible proof of it here) that the powerful and prevailing influence of the states, will produce such attention to local considerations as will be inconsistent with the advancement of the interests of the union. But I choose rather to indulge my hopes than fears, because I flatter myself, if inconveniences should result from it, that the clause which provides amendments will remedy them. The combination of powers vested in those persons, would seem conclusive in favor of the states.
The powers of the general government relate to external objects, and are but few. But the powers in the states relate to those great objects which immediately concern the prosperity of the people. Let us observe also, that the powers in the general government are those which will be exercised mostly in time of war, while those of the state governments will be exercised in time of peace. But I hope the time of war will be little compared to that of peace. I should not complete the view which ought to be taken of this subject, without making this additional remark, that the powers vested in the proposed government, are not so much an augmentation of powers in the general government, as a change rendered necessary, for the purpose of giving efficacy to those which were vested in it before. It cannot escape any gentleman, that this power in theory, exists in the confederation as fully as in this constitution. The only difference is this, that now they tax states, and by this plan they will tax individuals. There is no theoretic difference between the two. But in practice there will be an infinite difference between them. The one is an ineffectual power: the other is adequate to the purpose for which it is given. This change was necessary for the public safety.
Let us suppose for a moment, that the acts of congress requiring money from the states, had been as effectual as the paper on the table—suppose all the laws of congress had had complete compliance, will any gentleman say, that as far as we can judge from past experience, that the state governments would have been debased, and all consolidated and incorporated in one system? My imagination cannot reach it. I conceive, that had those acts that effect which all laws ought to have, the states would have retained their sovereignty.
It seems to be supposed, that it will introduce new expences and burdens on the people. I believe it is not necessary here to make a comparison between the expences of the present and of the proposed government. All agree that the general government ought to have power for the regulation of commerce. I will venture to say, that very great improvements, and very œconomical regulations will be made. It will be a principal object to guard against smuggling, and such other attacks on the revenue as other nations are subject to. We are now obliged to defend against those lawless attempts, but from the interfering regulations of different states, with little success. There are regulations in different states which are unfavorable to the inhabitants of other states, and which militate against the revenue. New-York levies money from New-Jersey by her imposts. In New-Jersey, instead of co-operating with New-York, the legislature favors violations on her regulations. This will not be the case when uniform regulations will be made.
Requisitions though ineffectual are unfriendly to œconomy. When requisitions are submitted to the states, there are near 2500 or 2000 persons deliberating on the mode of payment. All these, during their deliberation, receive public pay. A great proportion of every session, in every state, is employed to consider whether they will pay at all, and in what mode. Let us suppose 1500 persons are deliberating on this subject. Let any one make a calculation—it will be found that a very few days of their deliberation will consume more of the public money, than one year of that of the general legislature. This is not all, Mr. Chairman. When general powers will be vested in the general government, there will be less of that mutability which is seen in the legislation of the states. The consequence will be a great saving of expence and time. There is another great advantage which I will but barely mention. The greatest calamity to which the United States can be subject, is a vicissitude of laws, and continual shifting and changing from one object to another, which must expose the people to various inconveniences. This has a certain effect, of which sagacious men always have, and always will make an advantage. From whom is advantage made? From the industrious farmers and tradesmen, who are ignorant of the means of making such advantages.4 The people will not be exposed to these inconveniences under an uniform and steady course of legislation. But they have been so heretofore. The history of taxation of this country is so fully and well known to every member of this committee, that I shall say no more of it.
We have hitherto discussed the subject very irregularly. I dare not dictate to any gentleman, but I hope we shall pursue that mode of going through the business, which the house resolved. With respect to a great variety of arguments made use of, I mean to take notice of them when we come to those parts of the constitution to which they apply. If we exchange this mode, for the regular way of proceeding, we can finish it better in one week than in one month.
Robertson, Virginia Debates description begins David Robertson, Debates and Other Proceedings of the Convention of Virginia (2d ed.; Richmond, 1805). description ends , pp. 180–90.
1. Article 23 of the Franco-American treaty of 1778 recognized the concept of “free ships make free goods,” a point advanced by the League of Armed Neutrality two years later and consistently opposed by England (Miller, Treaties and Other International Acts, II, 21; Carl J. Kulsrud, Maritime Neutrality to 1780 [Boston, 1936], pp. 139–41, 143–50).
2. JM here repeats the argument he made in The Federalist No. 56 (PJM description begins William T. Hutchinson et al., eds., The Papers of James Madison (vols. 1–10, Chicago, 1962–77; vols. 11—, Charlottesville, Va., 1977—). description ends , X, 512–13).
3. JM’s discussion of this point closely follows the analysis in The Federalist No. 45 (PJM description begins William T. Hutchinson et al., eds., The Papers of James Madison (vols. 1–10, Chicago, 1962–77; vols. 11—, Charlottesville, Va., 1977—). description ends , X, 430–32).
4. “Another effect of public instability is the unreasonable advantage it gives to the sagacious, the enterprising and the moneyed few, over the industrious and uninformed mass of the people” (The Federalist No. 62, PJM description begins William T. Hutchinson et al., eds., The Papers of James Madison (vols. 1–10, Chicago, 1962–77; vols. 11—, Charlottesville, Va., 1977—). description ends , X, 539).