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FEDERALIST No. 32

The Same Subject Continued
(Concerning the General Power of Taxation)
From the Daily Advertiser.
Thursday, January 3, 1788.

HAMILTON

To the People of the State of New York:
ALTHOUGH I am of opinion that there would be no real danger of
 the consequences which seem to be apprehended to the State
 governments from a power in the Union to control them in the levies
 of money, because I am persuaded that the sense of the people, the
 extreme hazard of provoking the resentments of the State
 governments, and a conviction of the utility and necessity of local
 administrations for local purposes, would be a complete barrier
 against the oppressive use of such a power; yet I am willing here
 to allow, in its full extent, the justness of the reasoning which
 requires that the individual States should possess an independent
 and uncontrollable authority to raise their own revenues for the
 supply of their own wants. And making this concession, I affirm
 that (with the sole exception of duties on imports and exports) they
 would, under the plan of the convention, retain that authority in
 the most absolute and unqualified sense; and that an attempt on the
 part of the national government to abridge them in the exercise of
 it, would be a violent assumption of power, unwarranted by any
 article or clause of its Constitution.
An entire consolidation of the States into one complete national
 sovereignty would imply an entire subordination of the parts; and
 whatever powers might remain in them, would be altogether dependent
 on the general will. But as the plan of the convention aims only at
 a partial union or consolidation, the State governments would
 clearly retain all the rights of sovereignty which they before had,
 and which were not, by that act, EXCLUSIVELY delegated to the United
 States. This exclusive delegation, or rather this alienation, of
 State sovereignty, would only exist in three cases: where the
 Constitution in express terms granted an exclusive authority to the
 Union; where it granted in one instance an authority to the Union,
 and in another prohibited the States from exercising the like
 authority; and where it granted an authority to the Union, to which
 a similar authority in the States would be absolutely and totally
 CONTRADICTORY and REPUGNANT. I use these terms to distinguish this
 last case from another which might appear to resemble it, but which
 would, in fact, be essentially different; I mean where the exercise
 of a concurrent jurisdiction might be productive of occasional
 interferences in the POLICY of any branch of administration, but
 would not imply any direct contradiction or repugnancy in point of
 constitutional authority. These three cases of exclusive
 jurisdiction in the federal government may be exemplified by the
 following instances: The last clause but one in the eighth section
 of the first article provides expressly that Congress shall exercise
 ``EXCLUSIVE LEGISLATION'' over the district to be appropriated as
 the seat of government. This answers to the first case. The first
 clause of the same section empowers Congress ``TO LAY AND COLLECT
 TAXES, DUTIES, IMPOSTS AND EXCISES''; and the second clause of the
 tenth section of the same article declares that, ``NO STATE SHALL,
 without the consent of Congress, LAY ANY IMPOSTS OR DUTIES ON
 IMPORTS OR EXPORTS, except for the purpose of executing its
 inspection laws.'' Hence would result an exclusive power in the
 Union to lay duties on imports and exports, with the particular
 exception mentioned; but this power is abridged by another clause,
 which declares that no tax or duty shall be laid on articles
 exported from any State; in consequence of which qualification, it
 now only extends to the DUTIES ON IMPORTS. This answers to the
 second case. The third will be found in that clause which declares
 that Congress shall have power ``to establish an UNIFORM RULE of
 naturalization throughout the United States.'' This must
 necessarily be exclusive; because if each State had power to
 prescribe a DISTINCT RULE, there could not be a UNIFORM RULE.
A case which may perhaps be thought to resemble the latter, but
 which is in fact widely different, affects the question immediately
 under consideration. I mean the power of imposing taxes on all
 articles other than exports and imports. This, I contend, is
 manifestly a concurrent and coequal authority in the United States
 and in the individual States. There is plainly no expression in the
 granting clause which makes that power EXCLUSIVE in the Union.
 There is no independent clause or sentence which prohibits the
 States from exercising it. So far is this from being the case, that
 a plain and conclusive argument to the contrary is to be deduced
 from the restraint laid upon the States in relation to duties on
 imports and exports. This restriction implies an admission that, if
 it were not inserted, the States would possess the power it
 excludes; and it implies a further admission, that as to all other
 taxes, the authority of the States remains undiminished. In any
 other view it would be both unnecessary and dangerous; it would be
 unnecessary, because if the grant to the Union of the power of
 laying such duties implied the exclusion of the States, or even
 their subordination in this particular, there could be no need of
 such a restriction; it would be dangerous, because the introduction
 of it leads directly to the conclusion which has been mentioned, and
 which, if the reasoning of the objectors be just, could not have
 been intended; I mean that the States, in all cases to which the
 restriction did not apply, would have a concurrent power of taxation
 with the Union. The restriction in question amounts to what lawyers
 call a NEGATIVE PREGNANTτthat is, a NEGATION of one thing, and an
 AFFIRMANCE of another; a negation of the authority of the States to
 impose taxes on imports and exports, and an affirmance of their
 authority to impose them on all other articles. It would be mere
 sophistry to argue that it was meant to exclude them ABSOLUTELY from
 the imposition of taxes of the former kind, and to leave them at
 liberty to lay others SUBJECT TO THE CONTROL of the national
 legislature. The restraining or prohibitory clause only says, that
 they shall not, WITHOUT THE CONSENT OF CONGRESS, lay such duties;
 and if we are to understand this in the sense last mentioned, the
 Constitution would then be made to introduce a formal provision for
 the sake of a very absurd conclusion; which is, that the States,
 WITH THE CONSENT of the national legislature, might tax imports and
 exports; and that they might tax every other article, UNLESS
 CONTROLLED by the same body. If this was the intention, why not
 leave it, in the first instance, to what is alleged to be the
 natural operation of the original clause, conferring a general power
 of taxation upon the Union? It is evident that this could not have
 been the intention, and that it will not bear a construction of the
 kind.
As to a supposition of repugnancy between the power of taxation
 in the States and in the Union, it cannot be supported in that sense
 which would be requisite to work an exclusion of the States. It is,
 indeed, possible that a tax might be laid on a particular article by
 a State which might render it INEXPEDIENT that thus a further tax
 should be laid on the same article by the Union; but it would not
 imply a constitutional inability to impose a further tax. The
 quantity of the imposition, the expediency or inexpediency of an
 increase on either side, would be mutually questions of prudence;
 but there would be involved no direct contradiction of power. The
 particular policy of the national and of the State systems of
 finance might now and then not exactly coincide, and might require
 reciprocal forbearances. It is not, however a mere possibility of
 inconvenience in the exercise of powers, but an immediate
 constitutional repugnancy that can by implication alienate and
 extinguish a pre-existing right of sovereignty.
The necessity of a concurrent jurisdiction in certain cases
 results from the division of the sovereign power; and the rule that
 all authorities, of which the States are not explicitly divested in
 favor of the Union, remain with them in full vigor, is not a
 theoretical consequence of that division, but is clearly admitted by
 the whole tenor of the instrument which contains the articles of the
 proposed Constitution. We there find that, notwithstanding the
 affirmative grants of general authorities, there has been the most
 pointed care in those cases where it was deemed improper that the
 like authorities should reside in the States, to insert negative
 clauses prohibiting the exercise of them by the States. The tenth
 section of the first article consists altogether of such provisions.
 This circumstance is a clear indication of the sense of the
 convention, and furnishes a rule of interpretation out of the body
 of the act, which justifies the position I have advanced and refutes
 every hypothesis to the contrary.
PUBLIUS.