The Federalist Papers (1787-1789): Federalist Essay No.30 - No.36

Summary

The power of the government to act on behalf of the national security should only be bounded by the needs of the nation and the resources. Since this is partially determined through the amount of revenue available, the ability of the government to gain revenue must not be hindered by anything except for the power of the people represented in the legislative branch.

A serious flaw of the Articles of Confederation was that although it gave Congress the responsibility for managing the needs of the confederacy, it did not provide the means to do so. The government did not have the power to directly collect taxes. Relying on requisitions and quotas from the state did not fill the national treasury, and threatened to ruin the public credit.

The government's authority to tax should not be limited. The government should know the full extent of its resources and then judge the necessity of taking loans. This allows a nation to plan proactively for its prosperity and defense. Creditors are also more likely to loan to a country that has full authority to summon resources on its own, rather than being subject to the authority of 13 other decisions about the feasibility and speed of repaying those loans.

Critics claim that internal taxation should be the sole authority of local government, and that revenues collected from trade should go to the federal government. However, this policy not only places the federal government in subordinate position to the states, but forces them to either be in a continual state of not having enough money to provide for security and prosperity or to be continually relying on the states.

Other critics have suggested that the federal government should be limited to taxing only certain objects. However, these objects would bear an unfair burden, the industry that is focused on would be unfairly taxed and the taxes would fall unfairly amongst society and the separate states. For example, if the national government could only tax imports, not only would this be an unfair burden on the merchant class, but also an unfair advantage to the manufacturing states. New York would especially suffer under this set of circumstances.

The current plan of government includes a concurrent tax system, in which both the federal and the state governments maintain the authority to tax, except in the case of imports and exports which are exclusively restricted from state's authority.

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