Current Tax Payment Act of 1943

The above 1943 Donald Duck cartoon, The  Spirit of ’43,  was funded by the Department of the Treasury in 1943.  Prior to World War II very few Americans paid any income tax and there was no withholding.  With the increased taxes to pay for World War II, most full time non-agricultural American workers were going to be paying income tax and few were saving to pay the tax bill when it came due.

Federalist 35 – Hamilton

We have finally almost reached the end of the first part of the Federalist Papers.  There are two more essays that deal with the issue of taxation, and in number 35 Hamilton describes how placing a limitation on the federal government’s taxing power would lead to great abuse of that power.

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.

If you confine the government’s sources of revenue, then the government will bleed that particular industry dry.  This will lead to the development of a black market, thus only exacerbating the problems.  It is better, therefore, to permit a broader range of tax powers so that the government doesn’t focus its attention too greedily on any one industry.  Perhaps Hamilton did not countenance the government attempting to suck everyone dry.

Federalist 34 – Hamilton

Alexander Hamilton continues his long train of articles on the subject of taxation in Federalist 34.  He trods much of the same ground that he covered earlier, again defending the idea that the states and the federal government have concurrent taxing powers.  He uses an example from Roman times to justify the idea that such a concurrent power can truly exist.

There is one element of this paper that deserves close attention.  An underlying theme of this particular number is the idea that the Constitution is meant to endure.  This is not an inconsequential notion.  There were those – Thomas Jefferson, for instance – who posited that constitutions should be re-formed and redone frequently.   I think that Hamilton’s words merit great attention, because they demonstrate that the Framers did believe that they were penning a constitution meant to endure for quite a long period of time.

Here is the key passage: