"The Same Subject Continued
(Concerning the General Power of Taxation) For the Independent Journal."
[HAMILTON]
To the People of the State of New York:
BEFORE we proceed to examine any other objections to an
indefinite power of taxation in the Union, I shall make one general
remark; which is, that if the jurisdiction of the national
government, in the article of revenue, should be restricted to
particular objects, it would naturally occasion an undue proportion
of the public burdens to fall upon those objects. Two evils would
spring from this source: the oppression of particular branches of
industry; and an unequal distribution of the taxes, as well among
the several States as among the citizens of the same State.
Suppose, as has been contended for, the federal power of
taxation were to be confined to duties on imports, it is evident
that the government, for want of being able to command other
resources, would frequently be tempted to extend these duties to an
injurious excess. There are persons who imagine that they can never
be carried to too great a length; since the higher they are, the
more it is alleged they will tend to discourage an extravagant
consumption, to produce a favorable balance of trade, and to promote
domestic manufactures. But all extremes are pernicious in various
ways. Exorbitant duties on imported articles would beget a general
spirit of smuggling; which is always prejudicial to the fair
trader, and eventually to the revenue itself: they tend to render
other classes of the community tributary, in an improper degree, to
the manufacturing
classes, to whom they give a premature monopoly of the markets; they sometimes
force industry out of its more natural channels into others in which it flows
with less advantage; and in the last place, they oppress the merchant, who
is often obliged to pay them himself without any retribution from the consumer.
When the demand is equal to the quantity of goods at market, the consumer
generally pays the duty; but when the markets happen to be
overstocked, a great proportion falls upon the merchant, and
sometimes not only exhausts his profits, but breaks in upon his
capital. I am apt to think that a division of the duty, between the
seller and the buyer, more often happens than is commonly imagined.
It is not always possible to raise the price of a commodity in
exact proportion to every additional imposition laid upon it. The
merchant, especially in a country of small commercial capital, is
often under a necessity of keeping prices down in order to a more
expeditious sale.
The maxim that the consumer is the payer, is so much oftener
true than the reverse of the proposition, that it is far more
equitable that the duties on imports should go into a common stock,
than that they should redound to the exclusive benefit of the
importing States. But it is not so generally true as to render it
equitable, that those duties should form the only national fund.
When they are paid by the merchant they operate as an additional
tax upon the importing State, whose citizens pay their proportion of
them in the character of consumers. In this view they are
productive of inequality among the States; which inequality would
be increased with the increased extent of the duties. The
confinement of the national revenues to this species of imposts
would be attended with inequality, from a different cause, between
the manufacturing and the non-manufacturing States. The States
which can go farthest towards the supply of their own wants, by
their own manufactures, will not, according to their numbers or
wealth, consume so great a proportion of imported articles as those
States which are not in the same favorable situation. They would
not, therefore, in this mode alone contribute to the public treasury
in a ratio to their abilities. To make them do this it is necessary
that recourse be had to excises, the proper objects of which are
particular kinds of manufactures.
New York is more deeply interested in these considerations than such of her
citizens as contend for limiting the power of the Union to external taxation
may be aware of. New York is an importing State, and is not likely
speedily to be, to any great extent, a manufacturing State. She
would, of course, suffer in a double light from restraining the
jurisdiction of the Union to commercial imposts.
So far as these observations tend to inculcate a danger of the
import duties being extended to an injurious extreme it may be
observed, conformably to a remark made in another part of these
papers, that the interest of the revenue itself would be a
sufficient guard against such an extreme. I readily admit that this
would be the case, as long as other resources were open; but if the
avenues to them were closed, HOPE, stimulated by necessity, would
beget experiments, fortified by rigorous precautions and additional
penalties, which, for a time, would have the intended effect, till
there had been leisure to contrive expedients to elude these new
precautions. The first success would be apt to inspire false
opinions, which it might require a long course of subsequent
experience to correct. Necessity, especially in politics, often
occasions false hopes, false reasonings, and a system of measures
correspondingly erroneous. But even if this supposed excess should
not be a consequence of the limitation of the federal power of
taxation, the inequalities spoken of would still ensue, though not
in the same degree, from the other causes that have been noticed.
Let us now return to the examination of objections.
One which, if we may judge from the frequency of its repetition,
seems most to be relied on, is, that the House of Representatives is
not sufficiently numerous for the reception of all the different
classes of citizens, in order to combine the interests and feelings
of every part of the community, and to produce a due sympathy
between the representative body and its constituents. This argument
presents itself under a very specious and seducing form; and is
well calculated to lay hold of the prejudices of those to whom it is
addressed. But when we come to dissect it with attention, it will
appear to be made up of nothing but fair-sounding words. The object
it seems to aim at is, in the first place, impracticable, and in the
sense in which it is contended for, is unnecessary. I reserve for
another place the discussion of the question which relates
to the sufficiency of the representative body in respect to numbers, and
shall content myself with examining here the particular use which
has been made of a contrary supposition, in reference to the
immediate subject of our inquiries.
The idea of an actual representation of all classes of the
people, by persons of each class, is altogether visionary. Unless
it were expressly provided in the Constitution, that each different
occupation should send one or more members, the thing would never
take place in practice. Mechanics and manufacturers will always be
inclined, with few exceptions, to give their votes to merchants, in
preference to persons of their own professions or trades. Those
discerning citizens are well aware that the mechanic and
manufacturing arts furnish the materials of mercantile enterprise
and industry. Many of them, indeed, are immediately connected with
the operations of commerce. They know that the merchant is their
natural patron and friend; and they are aware, that however great
the confidence they may justly feel in their own good sense, their
interests can be more effectually promoted by the merchant than by
themselves. They are sensible that their habits in life have not
been such as to give them those acquired endowments, without which,
in a deliberative assembly, the greatest natural abilities are for
the most part useless; and that the influence and weight, and
superior acquirements of the merchants render them more equal to a
contest with any spirit which might happen to infuse itself into the
public councils, unfriendly to the manufacturing and trading
interests. These considerations, and many others that might be
mentioned prove, and experience confirms it, that artisans and
manufacturers will commonly be disposed to bestow their votes upon
merchants and those whom they recommend. We must therefore consider
merchants as the natural representatives of all these classes of the
community.
With regard to the learned professions, little need be observed;
they truly form no distinct interest in society, and according to
their situation and talents, will be indiscriminately the objects of
the confidence and choice of each other, and of other parts of the
community.
Nothing remains but the landed interest; and this, in a
political view, and particularly in relation to taxes, I take to be
perfectly united, from the wealthiest landlord down to the poorest
tenant. No tax can be laid on land which will not affect the
proprietor of millions of acres as well as the proprietor of a
single acre. Every landholder will therefore have a common interest
to keep the taxes on land as low as possible; and common interest
may always be reckoned upon as the surest bond of sympathy. But if
we even could suppose a distinction of interest between the opulent
landholder and the middling farmer, what reason is there to
conclude, that the first would stand a better chance of being
deputed to the national legislature than the last? If we take fact
as our guide, and look into our own senate and assembly, we shall
find that moderate proprietors of land prevail in both; nor is this
less the case in the senate, which consists of a smaller number,
than in the assembly, which is composed of a greater number. Where
the qualifications of the electors are the same, whether they have
to choose a small or a large number, their votes will fall upon
those in whom they have most confidence; whether these happen to be
men of large fortunes, or of moderate property, or of no property at
all.
It is said to be necessary, that all classes of citizens should
have some of their own number in the representative body, in order
that their feelings and interests may be the better understood and
attended to. But we have seen that this will never happen under any
arrangement that leaves the votes of the people free. Where this is
the case, the representative body, with too few exceptions to have
any influence on the spirit of the government, will be composed of
landholders, merchants, and men of the learned professions. But
where is the danger that the interests and feelings of the different
classes of citizens will not be understood or attended to by these
three descriptions of men? Will not the landholder know and feel
whatever will promote or insure the interest of landed property?
And will he not, from his own interest in that species of property,
be sufficiently prone to resist every attempt to prejudice or
encumber it? Will not the merchant understand and be disposed to
cultivate, as far as may be proper, the interests of the mechanic
and manufacturing arts, to which his commerce is so nearly allied?
Will not the man of the learned profession, who will feel a
neutrality to the
rivalships between the different branches of industry, be likely to prove
an impartial arbiter between them, ready to promote either, so far as it shall
appear to him conducive to the general interests of the society?
If we take into the account the momentary humors or dispositions
which may happen to prevail in particular parts of the society, and
to which a wise administration will never be inattentive, is the man
whose situation leads to extensive inquiry and information less
likely to be a competent judge of their nature, extent, and
foundation than one whose observation does not travel beyond the
circle of his neighbors and acquaintances? Is it not natural that a
man who is a candidate for the favor of the people, and who is
dependent on the suffrages of his fellow-citizens for the
continuance of his public honors, should take care to inform himself
of their dispositions and inclinations, and should be willing to
allow them their proper degree of influence upon his conduct? This
dependence, and the necessity of being bound himself, and his
posterity, by the laws to which he gives his assent, are the true,
and they are the strong chords of sympathy between the
representative and the constituent.
There is no part of the administration of government that
requires extensive information and a thorough knowledge of the
principles of political economy, so much as the business of taxation.
The man who understands those principles best will be least likely
to resort to oppressive expedients, or sacrifice any particular
class of citizens to the procurement of revenue. It might be
demonstrated that the most productive system of finance will always
be the least burdensome. There can be no doubt that in order to a
judicious exercise of the power of taxation, it is necessary that
the person in whose hands it should be acquainted with the general
genius, habits, and modes of thinking of the people at large, and
with the resources of the country. And this is all that can be
reasonably meant by a knowledge of the interests and feelings of the
people. In any other sense the proposition has either no meaning,
or an absurd one. And in that sense let every considerate citizen
judge for himself where the requisite qualification is most likely
to be found.
PUBLIUS
