The Federalist Vision of Taxation

Paper Summary:

This paper explains that when Alexander Hamilton wrote Federalist Paper #30 on December 28, 1787, the United States Congress, operating under a confederation of the thirteen former colonies, possessed no power to raise its own revenues. The author points out that Hamilton first tackled the dilemma of taxation by declaring that every government had to be capable of raising revenues. The paper presents an example of Hamilton's basic argument that the Congress, having incurred such large revenue, would not become a tyranny, but rather, its good endeavors would serve to counterbalance the enormous wealth that might, at times, have become concentrated in private hands.

From the Paper:

"Still more essential than the need for sufficient funds to aid in the general welfare, is the necessity of securing adequate financing in time of war. In Federalist paper #30, Hamilton states that even the richest and most powerful of nations are forced to take out huge loans in time of war. Taxation is necessary both for income and for good credit. Good credit would provide the new United States with a higher standing in the world, the respect of other nations, and the power to obtain funds for emergency expenditures such as war. War and credit thus reflected on a multitude of governmental operations and characteristics."

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