Federalist No.32

The Same Subject Continued

(Concerning the General Power of Taxation)

Wednesday, January 2, 1788

Alexander Hamilton


Article I, Section 10 of the Constitution:

  1. No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it's inspection Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Controul of the Congress.
  2. No State shall, without the Consent of Congress, lay any Duty of Tonnage, keep Troops, or Ships of War in time of Peace, enter into any Agreement or Compact with another State, or with a foreign Power, or engage in War, unless actually invaded, or in such imminent Danger as will not admit of delay.

32.1

Federalist 32 continues the discussion about the powers of taxation and the vexed question of state versus federal powers to raise taxes. In the previous paper, Hamilton addresses fears that state powers will be threatened by the new constitution. In this paper, he addresses the proposed powers of a federal government more specifically.

32.2

Hamilton begins this paper with an attempt to allay the fears of anti-Federalists and state governments:

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.
32.3

Hamilton’s argument in this paper shows that he considered the constitution as a document that defined federal powers, rather than a document that deprived states of their power. I say this because he explicitly states that the exclusive powers of a federal government to raise revenue lie in a duty of exports and imports. The states, by implication, maintain all other sovereign rights:

…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.
32.4

This exclusive power would only exist where:

  1. The constitution granted an exclusive power to the federal government;
  2. Where it granted in one instance an authority to the federal government;
  3. Where it prohibited the states from exercising a like authority.
32.5

Hamilton illustrates these points with three examples.

  1. The constitution gave the federal government exclusive jurisdiction over Washington DC
  2. The exclusive power to charge duties of imports and exports is granted only so far as imports in the question of states, since federal law is limited by a second clause which restricts the power of the federal government to impose duties on state exports.
  3. The federal government was granted an exclusive rule of naturalisation throughout the Union, which means that no state had the power of naturalisation, otherwise that would be in conflict with the rule of exclusive power granted to the federal government.
32.6

Hamilton’s point in the first part of this paper is that the constitution clearly outlines the powers of state and federal governments, and demonstrates that where states are not restricted by the constitution, they maintain the rights they formerly enjoyed, which means that while they may not be able to levy taxes on imports and exports, all other means of raising money are still open to them:

This restriction [to duties on imports and exports] 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.
32.7

Hamilton addresses an anti-Federalist argument that Section 10.3 of the constitution opens the door to states imposing import and export duties if they gain the consent of congress. The argument, as I understand it, is that the words in this section of the constitution – without the Consent of Congress (although section 2’s wording, all such Laws shall be subject to the Revision and Controul of the Congress seems more pertinent to me) implies that if states have the power to tax, and this power derives from congress by the silence of the constitution to restrict those powers, then other rights restricted by the constitution explicitly, like the power to levy imports and exports, might be granted states if the congress approves, and therefore also removed if congress so chose. I take it that this was a piece of sophistry, as Hamilton terms it, used by anti-Federalists to question the construction of the constitution and the threat to the state power Hamilton is at pains to assure will continue. Hamilton makes the point that if this were the real intention then the constitution may as well have been written to exclusively confer a general power of taxation upon the Union.

32.8

Hamilton concludes by saying that in some instances, as a result of these arrangement, there is a concurrent jurisdiction between state and federal governments. However, he concedes that there would be instances where this would be deemed to be improper, or contradictory and repugnant. In those instances, that the federal constitution provides that a state gives way to the federal government, and that the federal government retain the power.

4 September 2018