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Taxes and the General Welfare

Tags Taxes and SpendingU.S. EconomyMoney and Banking

04/08/2002Gary Galles

We are approaching April 15, when people's checkbooks remind them that even if "taxes are the price we pay for a civilized society," it doesn't follow that the civilization we get is worth the taxes we are forced to pay.

But this issue is hardly new. In fact, more than two centuries before our federal budget sped past the $2 trillion mark, those known as anti-federalists warned us that the price we would have to pay for government would rise. So as you struggle to understand the latest IRS forms, and particularly as you write that big check to the United States Treasury, it is worth remembering what they said.

The anti-federalists opposed the Constitution on the grounds that its checks on federal power would be undermined by expansive interpretations of promoting the "general welfare" (which would be claimed for all laws) and the "all laws necessary and proper" clause (which would expand limited federal power to all-inclusive), leading to a federal government so powerful that its powers were bound to be abused.

One particular concern was that it gave the national government almost unlimited taxing discretion. A leading proponent of that position was Robert Yates, a delegate to the Constitutional Convention who withdrew because the convention was exceeding its instructions. Yates wrote under the pseudonym of Brutus in the 1787 New York Journal.

Brutus described federal taxing power in one letter as one "that has such latitude, which reaches every person in the community in every conceivable circumstance, and lays hold of every species of property they possess, and which has no bounds set to it, but the discretion of those who exercise it."

In another letter, he said that "it will lead to the passing a vast number of laws, which may affect the personal rights of the citizens of the states, expose their property to fines and confiscation . . . It opens the door to the appointment of a swarm of revenue and excise officers to prey upon the honest and industrious part of the community [and] eat up their substance."

Brutus wrote that federal taxing powers "will introduce such an infinite number of laws and ordinances, fines and penalties, courts and judges, collectors, and excise men, that when a man can number them, he may enumerate the stars of Heaven," which sounds a lot like what millions of Americans face in the annual April torture of figuring out their IRS forms. 

Brutus also clearly pointed out how invasive tax collection could become:

This power, exercised without limitation, will introduce itself into every corner of the city, and country--it will wait upon the ladies at their toilet, and will not leave them in any of their domestic concerns; it will accompany them to the ball, the play, and assembly; it will go with them when they visit, and will, on all occasions, sit beside them in their carriages, nor will it desert them even at church; it will enter the house of every gentleman, watch over his cellar, wait upon his cook in the kitchen, follow the servants into parlor, preside over the table, and note down all he eats or drinks; it will accompany him to his bedchamber, and watch him while he sleeps; it will take cognizance of the professional man in his office, or study; it will watch the merchant in the counting-house, or in his store; it will follow the mechanic to his shop, and in his work, and will haunt him in his family, and in his bed; it will be a constant companion of the industrious farmer in all his labor, it will be with him in the house, and in the field, observe the toil of his hands, and the sweat of his brow; it will penetrate into the most obscure cottage; and finally, it will light upon the head of every person in the United States. To all these different classes of people, and in all these circumstances, in which it will attend them, the language in which it will address them will be GIVE! GIVE!

Brutus quite accurately described both the cause (erosion of constitutional restraints on the size and scope of the federal government) and the consequences (citizens facing ever higher taxes from the government's collection agency) of expanded federal taxing powers . But he was writing only of the effects of direct (e.g., excise) taxes and the small federal government they could finance, long before the 16th Amendment overrode the tax uniformity clause and opened the way for a federal income tax in 1913.

Don't let anyone tell you that the rich are somehow escaping. The wealthiest 1 percent now pay more than a third of all the taxes. This far outstrips their 19-percent portion of taxable income. Meanwhile, taxpayers in the bottom half pay only 4 percent of the taxes. Because the rich make a large contribution to productivity and investment, everyone suffers from this game of redistribution.

If Brutus was here to witness our current tax tab, he would conclude that he had been far too optimistic. A federal government, grown orders of magnitudes larger than he could ever have imagined, guarantees tax burdens beyond his worst nightmare.



Gary Galles

Gary M. Galles is a Professor of Economics at Pepperdine University and an adjunct scholar at the Ludwig von Mises Institute. He is also a research fellow at the Independent Institute, a member of the Foundation for Economic Education faculty network, and a member of the Heartland Institute Board of Policy Advisors.

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