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FEDERALIST No. 30

Concerning the General Power of Taxation
From the New York Packet.
Friday, December 28, 1787.

HAMILTON

To the People of the State of New York:
IT HAS been already observed that the federal government ought
 to possess the power of providing for the support of the national
 forces; in which proposition was intended to be included the
 expense of raising troops, of building and equipping fleets, and all
 other expenses in any wise connected with military arrangements and
 operations. But these are not the only objects to which the
 jurisdiction of the Union, in respect to revenue, must necessarily
 be empowered to extend. It must embrace a provision for the support
 of the national civil list; for the payment of the national debts
 contracted, or that may be contracted; and, in general, for all
 those matters which will call for disbursements out of the national
 treasury. The conclusion is, that there must be interwoven, in the
 frame of the government, a general power of taxation, in one shape
 or another.
Money is, with propriety, considered as the vital principle of
 the body politic; as that which sustains its life and motion, and
 enables it to perform its most essential functions. A complete
 power, therefore, to procure a regular and adequate supply of it, as
 far as the resources of the community will permit, may be regarded
 as an indispensable ingredient in every constitution. From a
 deficiency in this particular, one of two evils must ensue; either
 the people must be subjected to continual plunder, as a substitute
 for a more eligible mode of supplying the public wants, or the
 government must sink into a fatal atrophy, and, in a short course of
 time, perish.
In the Ottoman or Turkish empire, the sovereign, though in other
 respects absolute master of the lives and fortunes of his subjects,
 has no right to impose a new tax. The consequence is that he
 permits the bashaws or governors of provinces to pillage the people
 without mercy; and, in turn, squeezes out of them the sums of which
 he stands in need, to satisfy his own exigencies and those of the
 state. In America, from a like cause, the government of the Union
 has gradually dwindled into a state of decay, approaching nearly to
 annihilation. Who can doubt, that the happiness of the people in
 both countries would be promoted by competent authorities in the
 proper hands, to provide the revenues which the necessities of the
 public might require?
The present Confederation, feeble as it is intended to repose in
 the United States, an unlimited power of providing for the pecuniary
 wants of the Union. But proceeding upon an erroneous principle, it
 has been done in such a manner as entirely to have frustrated the
 intention. Congress, by the articles which compose that compact (as
 has already been stated), are authorized to ascertain and call for
 any sums of money necessary, in their judgment, to the service of
 the United States; and their requisitions, if conformable to the
 rule of apportionment, are in every constitutional sense obligatory
 upon the States. These have no right to question the propriety of
 the demand; no discretion beyond that of devising the ways and
 means of furnishing the sums demanded. But though this be strictly
 and truly the case; though the assumption of such a right would be
 an infringement of the articles of Union; though it may seldom or
 never have been avowedly claimed, yet in practice it has been
 constantly exercised, and would continue to be so, as long as the
 revenues of the Confederacy should remain dependent on the
 intermediate agency of its members. What the consequences of this
 system have been, is within the knowledge of every man the least
 conversant in our public affairs, and has been amply unfolded in
 different parts of these inquiries. It is this which has chiefly
 contributed to reduce us to a situation, which affords ample cause
 both of mortification to ourselves, and of triumph to our enemies.
What remedy can there be for this situation, but in a change of
 the system which has produced it in a change of the fallacious and
 delusive system of quotas and requisitions? What substitute can
 there be imagined for this ignis fatuus in finance, but that of
 permitting the national government to raise its own revenues by the
 ordinary methods of taxation authorized in every well-ordered
 constitution of civil government? Ingenious men may declaim with
 plausibility on any subject; but no human ingenuity can point out
 any other expedient to rescue us from the inconveniences and
 embarrassments naturally resulting from defective supplies of the
 public treasury.
The more intelligent adversaries of the new Constitution admit
 the force of this reasoning; but they qualify their admission by a
 distinction between what they call INTERNAL and EXTERNAL taxation.
 The former they would reserve to the State governments; the
 latter, which they explain into commercial imposts, or rather duties
 on imported articles, they declare themselves willing to concede to
 the federal head. This distinction, however, would violate the
 maxim of good sense and sound policy, which dictates that every
 POWER ought to be in proportion to its OBJECT; and would still
 leave the general government in a kind of tutelage to the State
 governments, inconsistent with every idea of vigor or efficiency.
 Who can pretend that commercial imposts are, or would be, alone
 equal to the present and future exigencies of the Union? Taking
 into the account the existing debt, foreign and domestic, upon any
 plan of extinguishment which a man moderately impressed with the
 importance of public justice and public credit could approve, in
 addition to the establishments which all parties will acknowledge to
 be necessary, we could not reasonably flatter ourselves, that this
 resource alone, upon the most improved scale, would even suffice for
 its present necessities. Its future necessities admit not of
 calculation or limitation; and upon the principle, more than once
 adverted to, the power of making provision for them as they arise
 ought to be equally unconfined. I believe it may be regarded as a
 position warranted by the history of mankind, that, IN THE USUAL
 PROGRESS OF THINGS, THE NECESSITIES OF A NATION, IN EVERY STAGE OF
 ITS EXISTENCE, WILL BE FOUND AT LEAST EQUAL TO ITS RESOURCES.
To say that deficiencies may be provided for by requisitions
 upon the States, is on the one hand to acknowledge that this system
 cannot be depended upon, and on the other hand to depend upon it for
 every thing beyond a certain limit. Those who have carefully
 attended to its vices and deformities as they have been exhibited by
 experience or delineated in the course of these papers, must feel
 invincible repugnancy to trusting the national interests in any
 degree to its operation. Its inevitable tendency, whenever it is
 brought into activity, must be to enfeeble the Union, and sow the
 seeds of discord and contention between the federal head and its
 members, and between the members themselves. Can it be expected
 that the deficiencies would be better supplied in this mode than the
 total wants of the Union have heretofore been supplied in the same
 mode? It ought to be recollected that if less will be required from
 the States, they will have proportionably less means to answer the
 demand. If the opinions of those who contend for the distinction
 which has been mentioned were to be received as evidence of truth,
 one would be led to conclude that there was some known point in the
 economy of national affairs at which it would be safe to stop and to
 say: Thus far the ends of public happiness will be promoted by
 supplying the wants of government, and all beyond this is unworthy
 of our care or anxiety. How is it possible that a government half
 supplied and always necessitous, can fulfill the purposes of its
 institution, can provide for the security, advance the prosperity,
 or support the reputation of the commonwealth? How can it ever
 possess either energy or stability, dignity or credit, confidence at
 home or respectability abroad? How can its administration be any
 thing else than a succession of expedients temporizing, impotent,
 disgraceful? How will it be able to avoid a frequent sacrifice of
 its engagements to immediate necessity? How can it undertake or
 execute any liberal or enlarged plans of public good?
Let us attend to what would be the effects of this situation in
 the very first war in which we should happen to be engaged. We will
 presume, for argument's sake, that the revenue arising from the
 impost duties answers the purposes of a provision for the public
 debt and of a peace establishment for the Union. Thus
 circumstanced, a war breaks out. What would be the probable conduct
 of the government in such an emergency? Taught by experience that
 proper dependence could not be placed on the success of
 requisitions, unable by its own authority to lay hold of fresh
 resources, and urged by considerations of national danger, would it
 not be driven to the expedient of diverting the funds already
 appropriated from their proper objects to the defense of the State?
 It is not easy to see how a step of this kind could be avoided;
 and if it should be taken, it is evident that it would prove the
 destruction of public credit at the very moment that it was becoming
 essential to the public safety. To imagine that at such a crisis
 credit might be dispensed with, would be the extreme of infatuation.
 In the modern system of war, nations the most wealthy are obliged
 to have recourse to large loans. A country so little opulent as
 ours must feel this necessity in a much stronger degree. But who
 would lend to a government that prefaced its overtures for borrowing
 by an act which demonstrated that no reliance could be placed on the
 steadiness of its measures for paying? The loans it might be able
 to procure would be as limited in their extent as burdensome in
 their conditions. They would be made upon the same principles that
 usurers commonly lend to bankrupt and fraudulent debtors, with a
 sparing hand and at enormous premiums.
It may perhaps be imagined that, from the scantiness of the
 resources of the country, the necessity of diverting the established
 funds in the case supposed would exist, though the national
 government should possess an unrestrained power of taxation. But
 two considerations will serve to quiet all apprehension on this
 head: one is, that we are sure the resources of the community, in
 their full extent, will be brought into activity for the benefit of
 the Union; the other is, that whatever deficiences there may be,
 can without difficulty be supplied by loans.
The power of creating new funds upon new objects of taxation, by
 its own authority, would enable the national government to borrow as
 far as its necessities might require. Foreigners, as well as the
 citizens of America, could then reasonably repose confidence in its
 engagements; but to depend upon a government that must itself
 depend upon thirteen other governments for the means of fulfilling
 its contracts, when once its situation is clearly understood, would
 require a degree of credulity not often to be met with in the
 pecuniary transactions of mankind, and little reconcilable with the
 usual sharp-sightedness of avarice.
Reflections of this kind may have trifling weight with men who
 hope to see realized in America the halcyon scenes of the poetic or
 fabulous age; but to those who believe we are likely to experience
 a common portion of the vicissitudes and calamities which have
 fallen to the lot of other nations, they must appear entitled to
 serious attention. Such men must behold the actual situation of
 their country with painful solicitude, and deprecate the evils which
 ambition or revenge might, with too much facility, inflict upon it.
PUBLIUS.