On this day in 1787, Federalist Paper No. 21 is published. The Federalist Papers are a collection of essays that were published in New York newspapers in late 1787 and early 1788. They were written under the pseudonym “Publius” and argued FOR the new Constitution, then being considered for ratification by the states.
Publius has finished discussing historical examples of failed confederacies. Now he turns to particular problems in America, with the Articles of Confederation in place.
(Friendly reminder: The Articles were the predecessor to our Constitution and governed the country in the first years after the Revolution.)
Publius notes that the then-existing national government has “no powers to exact obedience, or punish disobedience to their resolutions.” It is “destitute even of the shadow of constitutional power to enforce the execution of its own laws.” The government can “legally do nothing more than behold its encroachments with indignation and regret.” Such a powerless government cannot repel domestic dangers. Nor can it protect one state from the despotism of another.
Next, Publius laments the inadequate system of raising revenue in the existing government. The then-existing system of taxation was a system of quotas imposed upon the states by the national government. Publius argues that such a system is sure to become oppressive because the ability of states to pay taxes varies: “Situation, soil, climate, the nature of the productions, the nature of the government, the genius of the citizens, the degree of information they possess, the state of commerce, of arts, of industry, these circumstances and many more” influence their ability to pay. Such a rule, therefore creates “glaring inequality and extreme oppression.”
Not that the states could be made to pay their contributions anyway!
Publius advocates leaving this system behind. The national government must be able to levy direct taxes. Publius proposes one based upon consumption because such taxes “prescribe their own limit.” When the people feel that taxes are too high, “they lessen the consumption; the collection is eluded . . . This forms a complete barrier against any material oppression of the citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.”
Again, remember that Publius is addressing a nation that has had a very weak national government for many years. It had very little power to enforce laws or collect taxes. By contrast, we are viewing the world through the opposite lens: We feel over-regulated and over-taxed. Our goal should be to restore a proper balance.
Alexander Hamilton is the author of this particular paper. My post with more background on the Federalist Papers and their authorship can be found in the Federalist Paper No. 1 summary (see October 27 history post, here).