Alexander Hamilton Papers
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From Alexander Hamilton to Theodore Sedgwick, [January 1797]

To Theodore Sedgwick1

[New York, January, 1797]

Dr. Sir

I have been reading the report of the Secretary of the Treasury on the subject of direct taxes.2 I think it does him credit. The general principles and objects are certainly good. Nor am I sure that any thing better can be done.

I remember, however, that I once promised you to put in writing my ideas on the subject. I intended to have done it and communicated them to the Secretary. My hurry & press of business prevented me. But I concluded lately to devote an Evening to a rude sketch & to send it to you. You may shew it to the Secretary & confer. If in the course of the thing it can be useful to the general end we all have in view it will give me pleasure—if not there will have been but little time mispent. Of course no use will be made of it in contradiction to the views of the Treasury Department.

As to the part which relates to land, I do not feel any strong preference of my plan to that in the Report;3 for this in my opinion ought to be considered only as an auxiliary, and not as the pith of the tax. But I own I have a strong preference of my plan of a house tax to that in the Report.4 These are my reasons.

It is more comprehensive, embracing all houses, and will be proportionably more productive. It is more certain, avoiding the evasions and partialities to which valuations will be forever liable—and I think it for that reason, likely to be at least as equal. I entertain no doubt that the rule of rates, adapted as they are to characteristic circumstances, will in fact be more favourable to equality than appraisements. I think the idea of taxing only houses of above a certain annual value will be dissatisfactory. The comparison of the proprietors of houses immediately above with those immediately below the line will beget discontent—and the errors of valuations will increase it.

I think, there will be a great advantage in throwing the weight of the tax on houses, as well because lands are more difficult to manage as because it will fall in a manner less dissatisfactory.

My plan as to houses can easily be combined with that in the Report as to land.

Some years ago I proposed a similar plan in the legislature of this state.5 It went through three readings and had a great majority in its favour—but as it was essentially different from what had always before obtained in the state it was thought best to postpone to feel the sense of Constituents. I left the legislature. Changes in our political situation rendered the plan of state taxation less important—& the business shrunk out of sight. But there was every appearance that the plan would have been popular in this state.

You observe I confine myself to a Million. I would not bear hard in this way. I would add as aid, the taxes contemplated last session, on stamps, collateral successions, new modification of some articles of imports & let me add saddle horses. The idea of taxing slaves generally will not work well. If confined to all menial servants for luxury as Coachmen footmen cooks &c. it would be eligible.

Yrs. truly

A H

Mr Sedgwik

ALS, Hamilton Papers, Library of Congress.

1In JCHW description begins John C. Hamilton, ed., The Works of Alexander Hamilton (New York, 1851–1856). description ends , VI, 381, and in HCLW description begins Henry Cabot Lodge, ed., The Works of Alexander Hamilton (New York, 1904). description ends , X, 327, this letter is dated 1798. In Hamilton, History description begins John C. Hamilton, Life of Alexander Hamilton, a History of the Republic of the United States (Boston, 1879). description ends , VI, 592, and in HCLW description begins Henry Cabot Lodge, ed., The Works of Alexander Hamilton (New York, 1904). description ends , X, 227–28, the first paragraph of the letter H wrote to Sedgwick on January 20, 1797, is mistakenly printed as the first paragraph to this letter.

2This report, which is dated December 14, 1796, is printed in ASP description begins American State Papers, Documents, Legislative and Executive, of the Congress of the United States (Washington, 1832–1861). description ends , Finance, I, 414–65. See also H to William Loughton Smith, January 19, 1797; H to Sedgwick, January 20, 1797; and Fisher Ames to H, January 26, 1797.

3In his report of December 14, 1796, Oliver Wolcott, Jr., recommended that “the value of lands” be considered “as the most eligible criterion of assessment” (ASP description begins American State Papers, Documents, Legislative and Executive, of the Congress of the United States (Washington, 1832–1861). description ends , Finance, I, 439).

4In his report of December 14, 1796, Wolcott made the following recommendations for a tax on houses: “… Houses, therefore, being, in respect to their occupants, unproductive objects, and, in a fiscal view, mere indices of expense, the expediency of subjecting them to direct taxation is somewhat questionable.

“It is conceived that the houses and other buildings of the great body of farmers and laborers of a country ought to be regarded as objects of necessary expense, which are supported out of the profits of labor, or some other productive fund. Houses of this description are not, therefore, the most eligible objects of public revenue. If the tax were imposed by an uniform rule, its operation would not be materially different from an equal capitation: if imposed according to the value of the building, it would be very unequal, in respect to the revenue of individuals, and would, moreover, tend to discourage durable improvements.

“Such houses, however, as exceed in value the average of those occupied by farmers and laborers, may be regarded as among the most suitable objects of taxation. Perhaps there is no single criterion by which the comparative expenses of individuals can be so fairly estimated as by their dwellings. The assessment of a tax upon certain descriptions of houses only, unless restrained by legal provisions, might, however, be attended with difficulties arising from the danger of prejudice and partiality on a subject where no sense of a common interest would operate to prevent abuses.

“As a security against oppression, it is proposed that the law should declare, that houses, with the lots upon which they are erected, not exceeding two acres in any case, and not exceeding a certain value, to be defined in respect to each State, shall be wholly exempted.

“It is further proposed, that all houses and lots, exceeding in value the description to be exempted, should be distributed into three classes, with reference to their value, to be taxed uniformly in each class, at specific rates, to be prescribed by law.” (ASP description begins American State Papers, Documents, Legislative and Executive, of the Congress of the United States (Washington, 1832–1861). description ends , Finance, I, 440.)

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