Hylton v. United States Part 1: Federalists v. Antifederalists (1776-1796)

On June 28, 2012 the Supreme Court in the Case of National Federation of Independent Business v. Sebelius (Known as NFIB) ruled that the Affordable Care Act or “Obamacare”, is constitutional. Chief Justice John Roberts surprised legal and constitutional scholars by ruling that the act was constitutional, not based on the commerce clause as some were suspecting, but on the taxing power given to Congress by the United States Constitution. He wrote,

 “The same analysis here suggests that the shared responsibility payment may for constitutional purposes be considered a tax, not a penalty…A tax on going without health insurance is not like a capitation or other direct tax under this Court’s precedents.”[1]

Robert’s opinion was also interesting because of his ruling that the affordable care act was not a direct tax. Supreme Court rulings concerning direct taxation had appeared to become obsolete since the adoption of the 16th Amendment. The dissenting Justices, Scalia, Thomas, Alito and Kennedy, reacted strongly to Roberts’ opinion. They wrote,

 “We never have classified as a tax an exaction imposed for violation of the law, and so too, …we never have classified as a tax an exaction described in the legislation itself as a penalty.”

They added,

 “Finally, we must observe that rewriting §5000A as a tax in order to sustain its constitutionality would force us to confront a difficult constitutional question: whether this is a direct tax that must be apportioned among the States according to their population.”[2]

The dissenting opinion exposed two radical differences in the opposing justice’s understanding of taxation. They disagreed not only on what a tax was but on the classification of federal taxation as well. It may seem odd that the foremost jurists in the country could not agree on a subject that profoundly affects all Americans.

However history has shown that Supreme Court judges often widely disagree on fundamental issues, especially issues of federal taxation. Just 7 years after the ratifying of the U.S. Constitution a case came before the Supreme Court that also required the justices to rule on the nature of federal taxation. This was the 1796 Supreme Court case of Hylton v. United States. Like NFIB, Hylton also exposed two radically different theories regarding federal taxation. These theories stemmed from widely different views on government formulated by the two major political parties in the country, the Federalists and the Antifederalists.

Lets take a look at Hylton v. the United States to discover how Americans, at the founding of our country viewed taxation, and how those views can help us understand federal taxation in America today.

Hylton v. United States: The Historical Context

 In 1794 while Americans were fighting an Indian war in the Northwest Territory, the British began harassing U.S. merchant ships in the Atlantic. Many believed a two front war was about to ensue. In response to the urgent need for national defense funding, the Congressional Ways and means committee proposed a number of revenue raising initiatives. Most historians believe that the influence of Secretary of the Treasury, Alexander Hamilton was instrumental in persuading Congress to adopt these measures. This seems to be confirmed in a letter from James Madison to Thomas Jefferson. Madison wrote,

 “The report… which was the work of a sub-committee in understanding with the Fiscal Department was filled with a variety of items copied from the British revenue laws.”[3]

On May 27, 1794, one of those items was introduced into Congress for debate. It was called the Carriage Tax. It called for the,

“Levying of “duties and rates” on various types of carriages, “Kept by or for any person, for his or her own use, or to be let out to hire or for the conveying of passengers.”[4]

This tax was similar to ones that Hamilton had previously proposed to Congress in 1790 & 1792. However during the debate over the carriage tax several representatives including James Madison objected to it as unconstitutional based on the direct tax clause. Nonetheless the carriage tax passed and was to take effect in September of 1794. Madison in a letter to Jefferson lamented,

“…The tax on carriages succeeded in spite of the Constitution…”[5]

Controversy over the tax did not stop with its passage. In August 1794 in response to reports that some Virginians would oppose the carriage tax, Hamilton wrote in a letter to U.S. Commissioner of the Revenue, Tench Coxe,

 “It will be proper to instruct Mr. Carrington [U.S. Supervisor of the Revenue for the District of Virginia] to give facility to a legal decision in any case where it may be desired – taking care to secure an appeal in the last resort to the Supreme Court.”[6]

Hamilton was aware that the tax would be challenged and he was prepared to have the federal government sue those who opposed the tax. He was willing to take the case to the Supreme Court if necessary. The passage of the law by Congress did indeed generate a challenge including civil disobedience. The records state that there was one Mr. Hylton who owned,

“One hundred and twenty-five chariots for the conveyance of persons, but exclusively for his own separate use, and not to let out to hire, or for the conveyance of persons for hire.”[7]

Although history tells us that Mr. Hylton, a Virginia businessman, probably owned more carriages than existed in the whole state of Virginia, he nonetheless said these were for his own use and not for hire. Mr. Hylton subsequently refused to pay the tax on carriages. He was not however alone. Virginia jurist and constitutional scholar St. George Tucker wrote to future president James Monroe,

“A friend of yours in this place [Williamsburg] refused to pay the carriage tax, upon the ground that it was a direct tax, & not imposed according to the Constitution. So did Mr. Pendleton, Mr. Roan[e], Col Taylor, Mr. Page & some others.”[8]

This was no ordinary group of men. Rather they were some of the brightest legal minds in the country. Mr. Pendleton was Edmund Pendleton, President of the Virginia Supreme Court of Appeals. Spencer Roane was a general court judge, soon to be Virginia Supreme Court judge and son-in-law of Patrick Henry. Mr. Page was probably John Page a friend of Thomas Jefferson and current U.S. Congressman from Virginia. Colonel Taylor was probably Colonel James Taylor of Caroline. Not John Taylor. James Taylor served as a member of the Virginia ratification committee of the U.S. Constitution and as a state senator. These men were some of the most influential politicians and judges in the country. Their opinion on the carriage tax was that it was a direct tax and had not been administered constitutionally under the taxing power of the federal government. The tax was therefore void and did not have to be paid. Obviously these men had a completely different view on the constitutionality of the carriage tax than Alexander Hamilton.

The important question is why? What political philosophies led these men to have such diverse interpretations on the constitutionality of the carriage tax? Why did the Carriage tax generate so much controversy and why were the opponents prepared to test the constitutionality of the tax in the Supreme Court? To answer these questions we will begin with an examination of the controversy concerning the document that first established the United States as a union, the Articles of Confederation.

The Federalists Attack the Articles of Confederation

On July 12, 1776 a committee appointed by the Second Continental Congress began drafting the Articles of Confederation. They were eventually ratified by all 13 states and enacted on March 1781. The articles established the United States of America as a confederation of sovereign states and served as its first constitution. However following the end of the Revolutionary War the nation’s Federalist leaders harshly criticized the Articles. Representative of this group were James Madison, Alexander Hamilton and John Jay. The trio would later pen the pro-Constitution essays the Federalist Papers. George Washington was also considered a federalist.

The self-named Federalists were generally in favor of a strong central government and a revision of the Articles of Confederation, which they claimed were too weak for an effective national government. One aspect of the Articles they were especially critical of was in the area of taxation. They argued that the taxing power given to the national government under Section 8 of the Articles was totally inadequate for the nation. This is why. Section 8 states,

 “All charges of war, and all other expenses that shall be incurred for the common defense or general welfare and allowed by the United States in Congress assembled… shall be supplied by the several States… The taxes for paying that proportion shall be laid and levied by the authority and direction of the legislatures of the several States…”

Under the Articles, Congress could request funds from the states for the common defense. However Section 8 stipulated that it be left up to the state legislatures whether they would actually comply with the request. The national government had no authority under the Articles to compel them to comply. This left the national government with virtually no coercive taxing power over the states. The Federalists argued that the implications of this construction were extremely perilous to the new nation for several reasons. First they declared that the stipulations concerning taxation in Section 8 of the Articles were inadequate for national defense. The federalists argued that a lack of efficient federal taxation could result in a lack of funding during wartime. This would eventually lead to severe military shortages, which would inhibit the country’s ability to fight the war. In fact, during the Revolutionary War, state legislatures often failed to comply with Congress’ request for funds. Alexander Hamilton speaking about this in Federalist 22 noted,

 “The system of quotas and requisitions, whether it be applied to men or money, is, in every view, a system of imbecility in the Union… This practice in the course of the late war was found replete with obstructions to a vigorous and to an economical system of defense.”

In Hamilton’s opinion the system of taxation in the Articles was directly responsible for hindering the war with Britain. Its taxation structure was so loathsome to Hamilton that he called it a system of imbecility.

Secondly the Federalists argued that Congresses inability to tax under the Articles would retard the national government’s ability to pay down its war debt and also frustrate future borrowing attempts. The Treasury Department estimates that the United States debt was $43 million in 1783.[9] This would be comparable to a U.S. national debt of about $4 trillion in 2013 by a relative share of GDP. The states themselves had amassed a debt of about $25 million. Since Congress could not efficiently tax the states it was unlikely that the current or future debt could be paid off. This according to the Federalists would discourage investors from lending to the nation. Interestingly it was not debt that the Federalists were concerned with but with a way to service it. That is, make interest payments to bond holders. In fact the ability of a nation to borrow was a fundamental fiscal policy for many Federalists. Alexander Hamilton wrote,

“A national debt, if it is not excessive, will be to us a national blessing. It will be a powerful cement of our Union. It will also create a necessity for keeping up taxation to a degree which, without being oppressive, will be a spur to industry…”[10]

For Hamilton borrowing and debt was extremely important for the economic development of the new nation. However, there had to be a way to service it. That could only come through federal taxation of the states. The Articles blocked that ability. Thus for the federalists, a revision of the Articles of Confederation was necessary if the country was to prosper. The document had to contain provisions for a stronger central government. These included expanded taxing powers over the states, which would efficiently provide for the common defense and also enable the country to pay down its the national debt. However an obstacle lay in the federalist’s path. Section 13 of the Articles stipulated that alterations in any of the articles had to be confirmed by the legislatures of every state. The Federalists realized that getting all 13 state legislatures to agree to a change in taxation policy was impossible. They therefore decided to take the much more radical approach of persuading the country to scrap the Articles of Confederation and adopt an entirely new national constitution in its place.

The Antifederalists Warn of the Dangers Inherent in the New Constitution

In the summer of 1787 the state legislatures sent delegates to Philadelphia with the stated aim of amending the Articles of Confederation. However during the Constitutional Convention, delegates went beyond their defined powers of revising the Articles and proposed an entirely new form of government under the United States Constitution Not everyone at the Convention was pleased with the result. Out of the 55 delegates who attended the convention 15 refused to sign the document. One of those, Edmund Randolph of Virginia, predicted the Constitution would never survive ratification. The ensuing state ratification debates exposed two radically different views on the nature of government held by the leaders of the young nation. The debate pitted the Federalists, against a group known as the Antifederalists.

The Antifederalists included men such as Patrick Henry, George Mason, Richard Henry Lee, George Clinton, & Luther Martin. The name, Antifederalists, seems to have been imposed on them, since they preferred the names “democratic republicans or federal republicans”. Unlike the Federalists they were for strong state governments with a weaker national government. They were generally opposed to the new constitution in its present form. Particularly troubling to Antifederalists, regardless of their sectional ties was Article 1 Section 8 Clause 1, of the new Constitution. This is the clause that gives general taxing power to the federal government. It states,

 “The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States;”

This clause evoked strong opposition from the Antifederalists. Some even warned that if the States adopted the Constitution as it was, they would experience a tyranny worse than they endured under Britain. The Antifederalists let their views be known at the State ratifying Conventions and through a series of documents that later became known as the Antifederalist Papers.

Lets examine the Antifederalists criticisms of the general taxation clause in the Constitution.

The Antifederalists Criticisms of Article 1 Section 8 Clause 1 (The General Taxation Clause)

The Antifederalists cited 5 major flaws with the General taxation Clause of the new Proposed Constitution.

First, they believed that the general taxation clause was so vague that its interpretation could allow all kinds of taxation from any source within the country. Robert Yates, Chief Justice of the N.Y. Supreme Court, writing under the pseudonym Brutus produced probably the most widely read antifederalists’ documents at the time of the ratification. In Brutus #5 he wrote,

 “To detail the particulars comprehended in the general terms, taxes, duties, imposts and excises, would require a volume, instead of a single piece in a news-paper. Indeed… they extend to every possible way of raising money, whether by direct or indirect taxation. We may say then that this clause commits to the hands of the general legislature every conceivable source of revenue within the United States.”

Yates, clearly dissatisfied with the lack of federalist explanations of the taxation clause notes that the apparent vagueness of the clause could allow the federal government unlimited taxing authority.

William Symmes, a Harvard graduate, lawyer and member of the Massachusetts Ratifying convention agreed with Yates’ opinion. He stated,

 “The paragraph in question is an absolute decree of the people. The Congress shall have power… It is a universal, unbounded permission; and as such, I think, no free people ought ever to consent to it, especially in so important a matter as that of property.”[11]

Symmes also interpreted the clause as conferring on Congress comprehensive authority in all cases of taxation. Interestingly Supreme Court Justice Samuel Chase will confirm this opinion in the Hylton case.

Yates went on to explain the dangers that could ensue if his and Symmes’ opinions were correct,

“It will lead to the passing of a vast number of laws, which may affect the personal rights of the citizens of the states, expose their property to fines and confiscation, and put their lives in jeopardy: it opens a door to the appointment of a swarm of revenue and excise officers to pray [sic] upon the honest and industrious part of the community, eat up their substance, and riot on the spoils of the country.”[12]

Secondly, the Antifederalists believed that the Constitution in its present form left the states defenseless against federal overreach in the area taxation. The Federal Farmer, identified by historians as either Richard Henry Lee, former president of the Constitutional Congress or Melancton Smith, a prominent New York businessman wrote a series of letters assessing the new constitution. Concerning federal power he wrote,

“The state governments then we are told will stand between the arbitrary exercise of power and the people: true they may, but armless and helpless, perhaps, with the privilege of making a noise when hurt-this is no more than individuals may do. Does the Constitution provide a single check for a single measure, by which the state governments can constitutionally and regularly check the arbitrary measures of Congress?”[13]

In the “Farmers” opinion the proposed Constitution contained no provision for the states to check any law or arbitrary use of federal power. At this time, The Bill of Rights containing the 10th Amendment was not part of the Constitution

Thirdly, the Antifederalists noted that the taxing authority granted to the federal government in conjunction with the Necessary and Proper Clause of the Constitution would destroy the sovereignty of the states and give the federal government unlimited taxing power. James Warren, prominent Massachusetts Antifederalist and author of A Republican Federalist wrote,

“To give them the power of laying taxes, duties, imposts and excise, by way of providing for the welfare of the United States, and then constitute them judges of what is necessary for these purposes, is giving them power to satisfy at the expense of the states, any whim which ambition or the love of ostentation might suggest to them. But yet every law thus made will be binding: For they have an additional power expressly granted them, “to make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all the powers vested by this constitution in the government of the United States, or in any department or office thereof.”[14]

Here Warren specifically cites Article 1 Section 8 Clause 18 of the U.S. Constitution, the necessary and proper clause. Warren keenly observes that the necessary and proper clause would empower the federal government to be the ultimate judges of what taxes they may levy on the states. It would also give Congress the ability to pass any laws they chose. Thus they would have unlimited power of taxation over the states.

Robert Yates writing in Brutus #5 concurred,

 “The command of the revenues of a state gives the command of every thing in it. He that has the purse will have the sword, and they that have both, have everything; so that the legislature having every source from which money can be drawn under their direction, with a right to make all laws necessary and proper for drawing forth all the resource of the country, would have, in fact, all power.”

Like Warren, Yates also recognized that the Necessary and Proper clause would enable the federal government to pass tax legislation that would eventually give them ultimate power over the states. Both men astutely predicted future constitutional controversies that would arise between the federal government and the states concerning the necessary and proper clause. In the 1819 Supreme Court case of McCulloch v Maryland, Chief Justice John Marshall, concerning the necessary and proper clause wrote,

“But we think the sound construction of the Constitution must allow to the national legislature that discretion with respect to the means by which the powers it confers are to be carried into execution…”

Marshall here ruled that the national legislature has the discretion to determine what are the necessary and proper means for carrying out their powers. This in effect denied to the states much of their protection that had been granted under the 10th Amendment. It seems Yates’ and Warren’s fears over the necessary and proper clause would be realized.

Fourthly, the Antifederalists argued that a lack of limitations on the taxation clause would allow revenue to be channeled into military spending particularly a standing army. The nations recent experience with the British military, made many founders acutely aware of the dangers of a standing army. History had also shown them the threat a standing army posed to an existing government when controlled by the like of a Caesar. Indeed, George Mason at the Virginia Ratifying Convention exclaimed,

 “What havoc, desolation, and destruction, have been perpetrated by standing armies!”[15]

In the opinion of many Antifederalists, Article 1 Section 8 Clause 12 hinted at this danger. The clause states,

 “The Congress shall have Power To …raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years….”

Robert Yates commenting on this clause in Brutus #8 wrote,

 “The power to raise armies, is indefinite and unlimited, and authorizes the raising [of] forces, as well in peace as in war.”

Yates notes the vagueness of this clause as he did with the general taxation clause. The clause does in fact raise several unanswered questions. For example, where were the troops for armies to come from? Could the federal government impose a draft on the states? Why did the clause not limit the raising of armies to wartime alone? What was the need for an army in peacetime if there was already a clause in the Constitution that states,

 “The Congress shall have Power To …provide for calling forth the Militia to execute the Laws of the Union, suppress Insurrections and repel Invasions….” (Article I, Section 8, Clause 15)

Interestingly Samuel Bryan writing under the name “Centinel”, argued that the new nation was moving further towards militarism than Britain, as Parliament was only allowed to authorize the raising of troops for one year at a time. The Antifederalists however understood that the real danger of the “army clause” lay in its coupling with the “general taxation clause”.

A series of Antifederalist essays appeared in the Philadelphia Independent Gazetteer under the name An Old Whig. It was believed to have been written by a trio of Pennsylvanians, Supreme Court Judge George Bryan, John Smilie a delegate at the state ratifying convention, and James Hutchinson Surgeon General of Pennsylvania. They wrote,

“The unlimited power of taxation will give them the command of all the treasures of the continent; a standing army will be wholly at their devotion.”[16]

The Old Whig warned the American people that if the new government were permitted unlimited taxing power eventually a standing army would be a distinct possibility.

William Symmes in his speech before the Massachusetts Ratifying Convention hinted at what a standing army might be used for. He stated,

 “For, sir, I also disapprove of the power to collect, which is here vested in Congress. It is a power, sir, to burden us with a standing army of ravenous collectors, harpies, perhaps, from another state, but who, however, were never known to have bowels for any purpose, but to fatten on the life-blood of the people. In an age or two, this will be the case; and when the Congress shall become tyrannical, these vultures, their servants, will be the tyrants of the village, by whose presence all freedom of speech and action will he taken away.”[17]

Symmes suggested that the purpose of a standing army would indeed be used for the purpose of collecting taxes. Interestingly during the Civil War Representative Roscoe Conkling of New York referring to the new proposed income tax warned,

 “One of the most obnoxious — perhaps the most obnoxious — of all it features is that which creates an army of officers whose business it is to collect this tax.”[18]

The Antifederalists might have had justification for their fears. Alexander Hamilton writing in Federalist #23 stated,

 “The authorities essential to the common defense are these: to raise armies; to build and equip fleets; to prescribe rules for the government of both; to direct their operations; to provide for their support. These powers ought to exist without limitation [emphasis mine], because it is impossible to foresee or define the extent and variety of national exigencies, or the correspondent extent and variety of the means which may be necessary to satisfy them.”

In Hamilton’s opinion the federal government could demand unlimited taxation to support the common defense. However Brutus, recognizing the danger in Hamilton’s statement responded in Brutus #6,

 “I would ask those, who reason thus, to define what ideas are included under the terms, to provide for the common defense and general welfare! Are these terms definite, and will they be understood in the same manner, and to apply to the same cases by every one! No one will pretend they will. It will then be matter of opinion, what tends to the general welfare; and the Congress will be the only judges in the matter.” (Brutus #6)

Once again Brutus pointed out the vagueness of the terms common defense and general welfare and that ultimately Congress would have the power to define their interpretation. Interestingly Brutus may only have been partially right. Since 1789 there have been several Supreme Court cases that have dealt with the General Welfare clause. In Helvering v. Davis, Justice Cardozo in delivering the opinion of the Court wrote,

“Congress may spend money in aid of the “general welfare.” …The line must still be drawn between one welfare and another, between particular and general. The discretion, however, is not confided to the courts. The discretion belongs to Congress, unless the choice is clearly wrong, a display of arbitrary power, not an exercise of judgment. This is now familiar law.”[19]

Brutus was correct, Congress would decide how constitutional articles are defined. However they will do so with the rubberstamp of the Supreme Court.

At the Virginia Ratifying Convention Patrick Henry introduced a 5th criticism of the general taxation clause found in the Constitution. This one may have a more immediate and practical consequence. Henry argued that by assenting to the new Constitution the people of the states would subject themselves to a situation of double taxation. Henry stated,

“In this scheme of energetic government, the people will find two sets of tax-gatherers — the state and the federal sheriffs. This, it seems to me, will produce such dreadful oppression as the people cannot possibly bear. The federal sheriff may commit what oppression, make what distresses, he pleases, and ruin you with impunity; for how are you to tie his hands?”[20]

By ratifying the Constitution the people of the states would in effect place themselves under mandatory federal and state taxation. In 1794 farmers in western Pennsylvania experienced the power of what Henry called federal sheriffs. When the Pennsylvanians refused to pay what they believed to be an oppressive federal whiskey tax, the federal government sent 13,000 troops under the leadership of George Washington into Pennsylvania to put down the protest. Alexander Hamilton accompanied the troops as a civilian adviser.

James Madison’s Responds to Antifederalist Criticisms of the General Taxation Clause

James Madison in the Federalist Papers offered a number of responses to Antifederalist criticisms of the general taxation clause in the new proposed Constitution.

First, he suggested that state governments would keep federal overreach in check. In Federalist #45 he wrote,

 “Thus, each of the principal branches of the federal government will owe its existence more or less to the favor of the State governments, and must consequently feel a dependence… towards them.”

Madison’s opinion was that since the federal government is composed of members elected by the states the actions of the federal government are ultimately a reflection of what the states desire. Patrick Henry however disagreed,

 “I shall be told in this place, that those who are to tax us are our representatives. To this I answer, that there is no real check to prevent their ruining us. There is no actual responsibility. The only semblance of a check is the negative power of not re-electing them. This, sir, is but a feeble barrier, when their personal interest, their ambition and avarice, come to be put in contrast with the happiness of the people. All checks founded on anything but self-love, will not avail.”[21]

In Henry’s opinion state representation in the federal government will not be a check against federal overreach because individual representatives will always act out of self interest first and state interest second. The Federal Farmer speaking of federal taxation agreed with Henry. He wrote,

“…Further checks, in my mind, are indispensably necessary. Nor do I conceive, that as full a representation as is practicable in the federal government, will afford sufficient security…”[22]

Madison did offer more checks. In Federalist #45 Madison offered another check on federal taxation. He suggested that because the role of the federal government was limited, federal taxation would also be limited. He wrote,

 “It is true, that the Confederacy is to possess, and may exercise, the power of collecting internal as well as external taxes throughout the States; but it is probable that this power will not be resorted to, except for supplemental purposes of revenue… The powers delegated by the proposed Constitution to the federal government… will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected.”

Madison agreed that the federal government would possess the power to tax within the states, but he assures the public that this would probably be for only supplemental revenue. He also assures that this revenue will principally be for external objects, such as war, peace, negotiation, and foreign commerce. Madison’s use of the qualifiers, probably and principally, didn’t satisfy most Antifederalists. And as we have already seen the Antifederalists did not believe that limiting federal taxation to the above cases would in itself prevent its abuse.

Thirdly Madison contends that there are specific limitations on federal taxation within the Constitution itself. In Federalist #45 he wrote,

“It is true, that the Confederacy is to possess, and may exercise, the power of collecting internal as well as external taxes throughout the States…an option will then be given to the States to supply their quotas by previous collections of their own; and that the eventual collection, under the immediate authority of the Union, will generally be made by the officers, and according to the rules, appointed by the several States.”

Notice that Madison does not say the people of the states will be taxed directly. Instead he alludes to a state quota system for federal taxation. Madison might be implying that the federal government will not lay internal taxes on individuals but apportion the taxes as a quota to be fulfilled by each state. This may indeed be the correct interpretation, as Madison did not believe the carriage tax was constitutional. However his meaning is still vague. Since the word quota does not appear in the constitution what exactly did he mean? Madison does say later in the essay that,

“The powers delegated by the proposed Constitution to the federal government, are few and defined.”

If Madison is genuine here then he should have already defined the constitutional limits on federal taxation in a previous essay. He may have done so in Federalist #41. He writes,

“It has been urged and echoed, that the power “to lay and collect taxes, duties, imposts, and excises, to pay the debts, and provide for the common defense and general welfare of the United States, amounts to an unlimited commission to exercise every power which may be alleged to be necessary for the common defense or general welfare. No stronger proof could be given of the distress under which these writers labor for objections, than their stooping to such a misconstruction.”

Madison obviously thought unlimited federal taxation was a misunderstanding of Article 1 Section 8 clause 1. He went on,

“Had no other enumeration or definition of the powers of the Congress been found in the Constitution, than the general expressions just cited, the authors of the objection might have had some color for it; though it would have been difficult to find a reason for so awkward a form of describing an authority to legislate in all possible cases…”

Madison, clearly unsympathetic to a reading of the Constitution that ignores limitations on governmental power, implies that there are other enumerations and definitions of Congressional power within the Constitution, which limit the idea of comprehensive federal taxation. If by other enumerations Madison is implying that the army and welfare clause would limit federal taxation, the Antifederalists would surely not be persuaded. However, considering Madison’s belief that the Carriage Tax was unconstitutional and his contention that Congress’ power to tax is defined within the Constitution itself, it is quite possible that the other enumerations he is referring to are the indirect and direct tax clauses found within the Constitution. The apportionment rule associated with the direct tax clauses could be the “state taxation quotas”, Madison mentioned in Federalist #45. However, if Madison believed these clauses would have sufficient force to limit federal taxation neither he nor the other federalists ever clearly explained what exactly were direct or indirect taxes or how they would be applied. The question still remained, who would provide the authoritative interpretation of what these clauses actually mean? Would it be the Supreme Court, the Congress, the President or the several States?

Nonetheless an agreement to add a Bill of Rights to the constitution after ratification seems to have assuaged the fears of some Antifederalists. The Constitution was eventually ratified by all the states in May 1790. Four years later Congress will impose the carriage tax and its constitutionality will subsequently be challenged in the Supreme Court. The main argument will be whether the tax is an indirect or direct tax. If it were a direct tax it would be unconstitutional as it was placed on an individual and not apportioned among the states.

In part 2, we will examine the circuit court cases in Hylton and discover why Madison’s checks on taxation did not work as he planned and why the Antifederalist were ultimately correct in their assessment of the Constitution.

[1] 567 U.S. (2012)

[2] 567 U.S. (2012)

[3] Letter of Madison to Jefferson, May 11, 1784, 17 James Madison Papers 64

[4] Act of June 5, 1794, ch. 45, §1, 1 Stat. 373, 374 (repealed 1802)

[5] Letter of Madison to Jefferson, May 11, 1784, 17 James Madison Papers 64

[6] The Law Practice Of Alexander Hamilton: Document And Commentary Volume 4 (Julius Goebel, Jr. & Joseph H. Smith eds., 1980) at p.309.

[7] Hylton v. United States, 3 U.S. (3 Dall.) 171, 176 (1796).

[8] The Law Practice Of Alexander Hamilton: Document And Commentary Volume 4 (Julius Goebel, Jr. & Joseph H. Smith eds., 1980) at p. 309. (Quoting Letter from St. George Tucker to James Monroe (Mar. 8, 1795) (in ms. James Monroe Papers, at the Earl Gregg Swem Library, College of William and Mary, Williamsburg, Virginia).

[9] http://www.publicdebt.treas.gov/history/1700.htm

[10] Alexander Hamilton, Letter to Robert Morris, April 30, 1781

[11] Jonathan Elliot, ed., The Debates in the Several State Conventions, on the Adoption of the Federal Constitution, second edition (Philadelphia:J.B. Lippincott Company, 1936),vol. 2, p. 71.

[12] Brutus #5

[13] Federal Farmer #10

[14] The Documentary History of the Ratification of the Constitution (Merrill Jensen, John P. Kaminski, and Gaspare Saladino, eds.) vol. 14, p. 269.

[15] Virginia Ratifying Convention, Saturday, June 14, 1788

[16] An Old Whig #5

[17] The Debates in the Several State Conventions, p. 73-74.

[18] Congressional Globe (37/1), 272

[19] 301 U.S. 619 (1937)

[20] http://www.constitution.org/rc/rat_va_04.htm#henry-01

[21]American Eloquence: A Collection Of Speeches And Addresses By The Most Eminent Orators Of America (Volume: 1), Frank Moore, (1857) p.35.

[22] Letters from the Federal Farmer #17 to the Republican, Walter Hartwell Bennett, ed., (Tuscaloosa, Ala.: University of Alabama Press, 1978), p. 120.



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