Taxation – Our Framers Got It Right

What were they thinking? G.K. Chesterton long ago wrote how easily, or with apparent ease, societies discard beneficial practices and institutions without knowing two things. Why the practice or institution was the way it was, and second, without considering, without reasoning the subsequent effects of change? Nobody has any business destroying an institution until he examines it from a historical perspective.¹

Regular readers know my disdain for the 17th Amendment and its awful accumulated consequences. Yes, there was a building consensus in favor of popularly elected senators and in 1912 congress headed off a convention of the states. While the 17A is Constitutional, the majority in support of the 17A did not understand the why of a senate of the states, and accordingly, could not envision the horrid downside of popularly elected senators.²

In an analogous way, the late 19th and early 20th century efforts to replace the Framers’ allowance for direct federal taxes with income taxes ignored the WHY of their system, as well as the likely consequences of progressively taxing income.

Direct Taxes
No Capitation, or other direct Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken – Article I, Section 9, Clause 4.

The Constitution authorized the new government to raise revenue which had proved nearly impossible under the Articles of Confederation. Revolutionary war debt was enormous and if the US was to join the family of civilized nations, it needed the means to pay its debts and rapidly accumulating interest. Such was the revenue crisis under the Confederation’s framework of voluntary tax requisitions, that without a new system, George Washington said, “we may as well recur to the old Confederation.”³ The Union itself depended on, among other reforms, reliable revenue streams.

Still, a nation that had only recently revolted, in part, due to taxation by a distant monarch was understandably circumspect about taxation by a nearer government, but one still distinct and set above the states. What was understood from experience during and after the Revolutionary war was that during national emergencies, such as war, the ability to raise and borrow sufficient funds was essential.

Curiously, the Philadelphia convention of 1787 did not define direct taxation. James Madison’s notes record Massachusetts’ Rufus King asking for a precise meaning, for which he was answered with the sound of crickets.

Why the imprecision? No interpretation of “direct taxes” can be consistent with all statements made at the time, but the Founding debates refer to two forms of taxation for which apportionment was clearly intended: capitation taxes, and taxes on land. As with so much of the Constitution, the direct tax article was a compromise of sectional interests. Where the South demanded an allowance of 3/5 of slaves for representation in the House, it would pay for the extra representation with extra taxation.⁴

Direct, per-capita taxation apportioned by the census was unquestionably clunky to set up and very regressive; it meant higher tax rates in poorer states than in richer ones to collect the apportioned sums. As such, direct taxes never were intended and never became an everyday source of revenue. That is the beauty of the Framers’ system. The periods of regressive direct taxation were kept as brief as possible, i.e. during national emergencies. In this system, the interests of the people and congressmen coincided; knowing the heavy burden of taxation jeopardized their reelection, it was in the personal interest of congressional representatives to fight and win wars quickly.⁵

Now, as opposed to wartime, the Framers expected “duties, imposts, and excises” to cover the everyday expenses of peacetime government. There was a natural lid to these taxes at which point demand fell off; as such, the revenue stream from excises limited the size of peacetime government.

On these all-important distinctions, that indirect taxes would serve peacetime purposes, and heavy direct taxes were for national emergencies, the Framers once again hit a home run. In this era of pre-fiat currency it made the declaration of war a matter of serious deliberation not just from the certain loss of life, but its immediate effect on the people’s purse, and the political future of every congressman.

Other aspects of the 1787 Constitution will likewise puzzle the modern first-time reader. In a nation built on the consent of the governed, he will wonder why the Framers provided for three distinct groups of electors for the House of Reps, Senate, and the President. Why not simplify this complex arrangement and have the people directly elect the principals to each branch and house?

With the same eye toward simplicity and fairness, the modern reader undoubtedly shakes his head at the Framers’ approach to taxation. Good grief, regressive taxation is awful. Why not replace a regressive system with a progressive one that tends to level out the net income of one and all?

This short squib necessarily avoids the complex, intertwined events and scotus rulings leading to the 16th, 17th Amendments, and the Federal Reserve; they are not the point. The point is to remind us there is a history and purpose to every clause of the Framers’ Constitution. No, they were not gods, but they knew the nature of men and societies better than most 21st century sociologists and political scientists. Rather than dismiss them and their work as impossibly out of touch with the 21st Century, we will do well to study the WHY of what the Framers did before progressives once again flip over the card table and blindly start anew.

1. Chesterton, G. (1929). The Thing. Dodo Press. 18.

2. A Senate of the States Part II.

3. Maier, P. (2010). Ratification – The People Debate the Constitution. New York: Simon and Schuster, Inc. 428.

4. Meese, E. (2005). The Heritage Guide to the Constitution. Washington, DC: Regnery Publishing. 159.

5. Maier. 465. The 1798 Quasi-War w/France, War of 1812, and the Civil War.