This paper discusses the powers of the states and the federal government to impose taxes on the people. It discusses the notion of concurrent powers and exclusive powers as they relate to taxation. Concurrent powers are those that both the states and federal government share. Exclusive powers are those that only the states or the federal government can exercise.
In the case of taxes, the authority of the federal government to levy taxes does not preclude the state governments from doing the same thing since taxation is a concurrent power. The only restriction on the authority of the state governments to levy taxes relates to duties on imports and exports. Congress can levy such taxes, but state governments can only do so with the consent of Congress.
Hamilton acknowledges that the concurrent power of taxation could lead to situations in which state governments and the national government impose taxes on the same item, a situation that might be “inexpedient.” However, Hamilton asserts that the prudence of governments can be relied on to avoid such situations. It is not necessarily a “direct contradiction of power” for a state government and Congress to impose the same tax.
Hamilton assuages the fear that granting the national government the ability to levy taxes will preclude the states from doing the same thing. Opponents of the constitution feared that if only the federal government could generate revenue, the state government would be left in a severely weakened position.
By protecting the authority of states to impose taxes directly on their inhabitants, the constitution ensures that states remain relevant and effective. This paper illustrates the founders’ attempt to balance power between state and federal government.