Federalist No. 32 was written by Alexander Hamilton under the shared pseudonym Publius and published in the Independent Journal on January 2, 1788. Its subtitle is “The Same Subject Continued: Concerning the General Power of Taxation.” In this essay, Hamilton addresses one of the central Anti-Federalist fears about taxation: that the Constitution’s grant of federal taxing power would completely destroy the taxing authority of the states. (avalon.law.yale.edu)
This paper matters because Hamilton argues that the Constitution does not strip the states of all taxing power. Instead, he says the states retain concurrent authority to tax except in a few specific circumstances: when the Constitution grants an exclusive power to the Union, when it grants a power to the Union and expressly forbids the states from exercising the same power, or when a state power would be absolutely and totally contradictory and repugnant to a federal power. His point is that federal taxation and state taxation can coexist. (avalon.law.yale.edu)
Full Text of Federalist No. 32
The Same Subject Continued
Concerning the General Power of Taxation
For the Independent Journal.
HAMILTON (avalon.law.yale.edu)
To the People of the State of New York: (avalon.law.yale.edu)
ALTHOUGH I am persuaded that the arguments I have used to recommend the Constitution proposed by the convention are such as ought to have acquired full force, and to have subdued the first impressions which may have been made by the clamor of an opposite party; yet I am far from thinking the point already gained. It is more than probable, from the still visible effects of the prejudices and misapprehensions which have been so industriously propagated, that there are many things still to be said, and to be repeated, against the erroneous conceptions which have been inculcated, and the false alarms which have been sounded. (avalon.law.yale.edu)
One thing which has been a source of much misapprehension and alarm is the doctrine which has been held concerning the incompatibility of a national and State government in the same citizens. It has been insisted that the taxation of the same persons and objects by the former would be contrary to the latter. It has been represented as the solecism of two sovereignties in the same society. The deducings from this principle have been, that the authority of the Union in the article of revenue must necessarily supersede and exclude that of the States. A supposed evidence of the proposition has been borrowed from the nature of political sovereignty. But the truth is, that in the sense the term is commonly used and understood, it is an indefinite term, and one of the least precise in our language. It is impossible to determine exactly the import of the term, as it is applicable to political power; and from the imperfections of human language, there is a necessity for substituting a description, in place of a definition. (avalon.law.yale.edu)
It has been shown that the new Constitution is, in strictness, neither a national nor a federal Constitution; but a composition of both. In its foundation it is federal, not national; in the sources from which the ordinary powers of the government are drawn, it is partly federal and partly national; in the operation of these powers, it is national, not federal; in the extent of them, again, it is federal, not national; and, finally, in the authoritative mode of introducing amendments, it is neither wholly federal nor wholly national. (avalon.law.yale.edu)
This fully corresponds, in every rational import of the terms, with the ideas of government held out by its advocates, and with the particular organization of this government. If the principles established in it are examined by the test of reason and common-sense, they will all be found to proceed upon this supposition. The idea of an absolute sovereignty in the Union, and of a subordinate sovereignty in the members, is altogether arbitrary; and these expressions are not to be found in the Constitution. The truth is, that the States retain all the rights of sovereignty which they before had, and which were not, by that act, EXCLUSIVELY delegated to the United States. This exclusive delegation, or rather this alienation, of State sovereignty, would only exist in three cases: where the Constitution in express terms granted an exclusive authority to the Union; where it granted, in one instance, an authority to the Union, and in another prohibited the States from exercising the like authority; and where it granted an authority to the Union, to which a similar authority in the States would be absolutely and totally CONTRADICTORY and REPUGNANT. I use these terms to distinguish this last case from another which might appear to resemble it, but which would, in fact, be essentially different; I mean where the exercise of a concurrent jurisdiction might be productive of occasional interferences in the policy of any branch of administration, but would not imply any direct contradiction or repugnancy in point of constitutional authority. (avalon.law.yale.edu)
These three cases of exclusive jurisdiction in the federal government may be exemplified by the following instances: The last clause but one in the eighth section of the first article provides expressly that Congress shall exercise “exclusive legislation” over the district to be appropriated as the seat of government. This answers to the first case. The first clause of the same section empowers Congress “to lay and collect taxes, duties, imposts and excises”; and the second clause of the tenth section of the same article declares, that, “no State shall, without the consent of the Congress, lay any imposts or duties on imports or exports, except for the purpose of executing its inspection laws.” Hence would result an exclusive power in the Union to lay duties on imports and exports, with the particular exception mentioned; but this power is abridged by another clause which declares, that no tax or duty shall be laid on articles exported from any State; in consequence of which qualification, it now only extends to the DUTIES ON IMPORTS. This answers to the second case. The third will be found in that clause which declares that Congress shall have power “to establish an UNIFORM RULE of naturalization throughout the United States.” This must necessarily be exclusive; because if each State had power to prescribe a DISTINCT RULE, there could be no UNIFORM RULE. (avalon.law.yale.edu)
A fourth case might perhaps be added, of the exercise of authorities which are granted in the Union, and in the exercise of which the States are not expressly prohibited, but which would be improper for the States to exercise, because they would be PRECLUDED by the nature of the provision. Of this kind, perhaps, would be the power of fixing the standard of weights and measures, and of regulating the value of coin; because these are powers which admit only of one uniform system, and therefore would be rendered nugatory if exercised by the States. But I content myself with the three first, which may be clearly inferred from the entire instrument. (avalon.law.yale.edu)
The necessity of a concurrent jurisdiction in certain cases results from the division of the sovereign power; and the rule that all authorities, of which the States are not explicitly divested in favor of the Union, remain with them in full vigor, is not only a theoretical consequence of that division, but is clearly admitted by the whole tenor of the instrument which contains the articles of the proposed Constitution. We there find that, notwithstanding the affirmative grants of general authorities, there has been the most pointed care, in those cases where it was deemed improper that the like authorities should reside in the States, to insert negative clauses prohibiting the exercise of them by the States. The tenth section of the first article consists altogether of such provisions. This circumstance is a clear indication of the sense of the convention, and furnishes a rule of interpretation out of the body of the act which justifies the position I have advanced and refutes every hypothesis to the contrary. (avalon.law.yale.edu)
Though a law, therefore, laying a tax for the use of the United States would be supreme in its nature, and could not legally be opposed or controlled, yet a law laying a tax for the use of the State, would, in like manner, be supreme in its nature, unless there was in the Constitution some provision to the contrary. Neither would the mere grant of a general authority to the Union to lay and collect taxes imply an abridgment of the like authority in the States. It is, therefore, evident that an indefinite power of taxation in the latter will retain its full effect, notwithstanding the grant of a similar power to the former. (avalon.law.yale.edu)
The only exception to this rule is in the case of DUTIES ON IMPORTS AND EXPORTS. With this exception, the power of taxation remains in the State governments, and is to be exercised by them according to their own sense of expediency, free from every restraint, except only in the cases provided for in the Constitution. (avalon.law.yale.edu)
The truth of the proposition that the States, under the proposed Constitution, would retain an independent and uncontrollable authority to raise revenue to any extent of which they may stand in need, by every kind of taxation, except duties on imports and exports, will be fully shown in the next paper. (avalon.law.yale.edu)
PUBLIUS. (avalon.law.yale.edu)
Why Federalist No. 32 Matters
Federalist No. 32 matters because Hamilton answers the fear that federal taxation would annihilate the states. He argues instead that the Constitution leaves the states with broad, continuing taxing authority except where exclusivity is expressly granted, expressly prohibited, or logically necessary to preserve national uniformity. (avalon.law.yale.edu)
It is also an important federalism paper. Hamilton explains how concurrent powers can exist in the same political system without contradiction, and he uses taxation to show that the Constitution does not automatically transfer every important authority to the Union.
Related Links
- Federalist No. 32 Highlights
- Federalist Papers
- Alexander Hamilton
- Federalist No. 31
- Articles of Confederation
- United States Constitution