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Federal Taxation Before 1789

Gary North - June 02, 2016

This is from the Articles of Confederation (ratified, 1781).

All charges of war, and all other expenses that shall be incurred for the common defense or general welfare, and allowed by the United States in Congress assembled, shall be defrayed out of a common treasury, which shall be supplied by the several States in proportion to the value of all land within each State, granted or surveyed for any person, as such land and the buildings and improvements thereon shall be estimated according to such mode as the United States in Congress assembled, shall from time to time direct and appoint.

The taxes for paying that proportion shall be laid and levied by the authority and direction of the legislatures of the several States within the time agreed upon by the United States in Congress assembled. (Article VIII)

This is the only mention of taxation. The federal government possessed no taxation power over individuals.

This changed with the Constitution of 1787, which was ratified in 1788.

Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons. The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct. (Art. I, Sec 2). . .

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; (Sec. 8). . . .

The Migration or Importation of such Persons as any of the States now existing shall think proper to admit, shall not be prohibited by the Congress prior to the Year one thousand eight hundred and eight, but a Tax or duty may be imposed on such Importation, not exceeding ten dollars for each Person. . . .

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.

No Tax or Duty shall be laid on Articles exported from any State. (Sec. 9)

HAMILTON'S LAMENT

Alexander Hamilton, the most beloved of the so-called Founding Fathers in this generation of big government and high taxes -- never high enough! -- wanted a much larger national government. The Federalists were in fact nationalists. They were opposed by the defenders of federalism, who wanted a weaker central government. Such a weak central government would have no power of direct taxation. Hamilton wanted a large national government. This meant that it had to have direct taxation.

The states could not and would not maximize tax revenues. That, he believed, was a huge liability of the Articles of Confederation. The people -- those crafty self-interested evaders of taxes -- would find ways of escape. He wrote in Federalist 12:

The relative situation of these States; the number of rivers with which they are intersected, and of bays that wash there shores; the facility of communication in every direction; the affinity of language and manners; the familiar habits of intercourse; --all these are circumstances that would conspire to render an illicit trade between them a matter of little difficulty, and would insure frequent evasions of the commercial regulations of each other. The separate States or confederacies would be necessitated by mutual jealousy to avoid the temptations to that kind of trade by the lowness of their duties. The temper of our governments, for a long time to come, would not permit those rigorous precautions by which the European nations guard the avenues into their respective countries, as well by land as by water; and which, even there, are found insufficient obstacles to the adventurous stratagems of avarice. .

No, no, no: we must not let this continue. What was needed was a central state that could tax commerce directly. Nothing else would do. Here is how Hamilton ended Federalist 12, the essay on taxation. The central government must avoid such degradation. Yes, my friends, degradation! There is only one way to avoid this: direct taxation by the central government. No more dependence on the states to supply the revenues it requires to increase its power.

What will be the consequence, if we are not able to avail ourselves of the resource in question in its full extent? A nation cannot long exist without revenues. Destitute of this essential support, it must resign its independence, and sink into the degraded condition of a province. This is an extremity to which no government will of choice accede. Revenue, therefore, must be had at all events. In this country, if the principal part be not drawn from commerce, it must fall with oppressive weight upon land. It has been already intimated that excises, in their true signification, are too little in unison with the feelings of the people, to admit of great use being made of that mode of taxation; nor, indeed, in the States where almost the sole employment is agriculture, are the objects proper for excise sufficiently numerous to permit very ample collections in that way. Personal estate (as has been before remarked), from the difficulty in tracing it, cannot be subjected to large contributions, by any other means than by taxes on consumption. In populous cities, it may be enough the subject of conjecture, to occasion the oppression of individuals, without much aggregate benefit to the State; but beyond these circles, it must, in a great measure, escape the eye and the hand of the tax-gatherer. As the necessities of the State, nevertheless, must be satisfied in some mode or other, the defect of other resources must throw the principal weight of public burdens on the possessors of land. And as, on the other hand, the wants of the government can never obtain an adequate supply, unless all the sources of revenue are open to its demands, the finances of the community, under such embarrassments, cannot be put into a situation consistent with its respectability or its security. Thus we shall not even have the consolations of a full treasury, to atone for the oppression of that valuable class of the citizens who are employed in the cultivation of the soil. But public and private distress will keep pace with each other in gloomy concert; and unite in deploring the infatuation of those counsels which led to disunion.

The public bought it. Anyway, a majority of the delegates sent to the illegal ratifying conventions that Madison designed bought it.

The public still buys it. Voters cannot imagine a tax system in which the central government is dependent on state governments for its funding. And they have never thought of state governments dependent on county governments for their funding. Why, that would starve governments higher than the counties. Starve!

CENTRALIZING POWER

In a church, voting members would not tolerate a central church in which every level of the denomination's bureaucracy independently imposed tithing obligations on members. Members would demand either independent congregations with no hierarchy above them, or else a hierarchy funded by local congregations, but not members. They would instantly recognize anything else as tyranny: a grant of fiscal independence to the higher levels of the denomination. They would see that this would lead to the bureaucratization of church. They would be correct.

They are blind to the same system of taxation in the nation.

Yet if Americans were told that the United Nations would be granted this right of independent taxation, they would instruct their Senators not to ratify the treaty. No such treaty has ever been signed by any President.

We live in a political world in between the Articles of Confederation (no direct taxation by the central government) and the UN (no direct taxation by the central government). The public sees nothing amiss with direct taxation by the national government.

Most of them did in 1787-88. But Madison had rigged the ratification system so that the nationalists gained control.

BYPASSING THE CONSTITUTION IN THE NAME OF THE CONSTITUTION

Article XIII of the Articles had spelled out the basis of amending the document: unanimity of the legislatures.

Every State shall abide by the determination of the United States in Congress assembled, on all questions which by this confederation are submitted to them. And the Articles of this Confederation shall be inviolably observed by every State, and the Union shall be perpetual; nor shall any alteration at any time hereafter be made in any of them; unless such alteration be agreed to in a Congress of the United States, and be afterwards confirmed by the legislatures of every State.

And Whereas it hath pleased the Great Governor of the World to incline the hearts of the legislatures we respectively represent in Congress, to approve of, and to authorize us to ratify the said Articles of Confederation and perpetual Union. Know Ye that we the undersigned delegates, by virtue of the power and authority to us given for that purpose, do by these presents, in the name and in behalf of our respective constituents, fully and entirely ratify and confirm each and every of the said Articles of Confederation and perpetual Union, and all and singular the matters and things therein contained: And we do further solemnly plight and engage the faith of our respective constituents, that they shall abide by the determinations of the United States in Congress assembled, on all questions, which by the said Confederation are submitted to them. And that the Articles thereof shall be inviolably observed by the States we respectively represent, and that the Union shall be perpetual.

Madison & Co. found that way too confining. They bypassed the legislatures. They substituted conventions. They dropped the percentage from 100% to 69%. "The Ratification of the Conventions of nine States, shall be sufficient for the Establishment of this Constitution between the States so ratifying the Same."

TRADEMARK VIOLATION

They did maintain one element of the Articles: the trademarked name of the country.

The Stile of this Confederacy shall be

"The United States of America"

This brand name transfer worked so well that the New World Order took the name of the allies in World War II -- the United Nations -- and attached it to the United Nations, created in 1945. This was bait and switch on an international scale. We read this in the Wikipedia entry, "Declaration by United Nations."

The earliest concrete plan for a new world organization began under the aegis of the US State Department in 1939. The text of the "Declaration by United Nations" was drafted by President Franklin Roosevelt, British Prime Minister Winston Churchill, and Roosevelt aide Harry Hopkins, while meeting at the White House on 29 December 1941. It incorporated Soviet suggestions, but left no role for France. Roosevelt first coined the term United Nations to describe the Allied countries. Roosevelt suggested "United Nations" as an alternative to the name "Associated Powers." Churchill accepted it, noting that the phase was used by Lord Byron in the poem Childe Harold's Pilgrimage (Stanza 35). The term was first officially used on 1--2 January 1942, when 26 governments signed the Declaration. One major change from the Atlantic Charter was the addition of a provision for religious freedom, which Stalin approved after Roosevelt insisted. By spring 1945 it was signed by 21 more states.

The Declaration by United Nations, on 1 January 1942, was the basis of the modern UN. The term United Nations became synonymous during the war with the Allies and was considered to be the formal name that they were fighting under. The text of the declaration affirmed the signatories' perspective "that complete victory over their enemies is essential to defend life, liberty, independence and religious freedom, and to preserve human rights and justice in their own lands as well as in other lands, and that they are now engaged in a common struggle against savage and brutal forces seeking to subjugate the world". The principle of "complete victory" established an early precedent for the Allied policy of obtaining the Axis' powers' "unconditional surrender". The defeat of "Hitlerism" constituted the overarching objective, and represented a common Allied perspective that the totalitarian militarist regimes ruling Germany, Italy, and Japan were indistinguishable. The declaration, furthermore, "upheld the Wilsonian principles of self determination," thus linking U.S. war aims in both world wars.

The centralists long ago figured out what Madison & Co. figured out: When people grant legitimacy to a cause, as embodied in a name, steal the name.

The absence of direct taxation remains the missing link. The U.S. Constitution is the model, but the commitment of voters, nation by nation, to national sovereignty has remained an impediment. But the NWO is always working on this. The NWO substitutes other kinds of control, such as NAFTA, in the meantime. Its motto: "Take what you can get, and then ask for more."

CONCLUSIONS

The legal right to tax people and entities directly is the supreme mark of political sovereignty. This right is basic to the expansion of government power.

Decentralization requires the abolition of the power to tax above the local civil government. All other plans to decentralize political power crash onto the rocks of direct taxation above the county.

This is not how politics is discussed. This is why there is no serious movement to decentralize political power.

Hence,

1. Follow the money.

2. Block the money.

3. Do not call for another Constitutional Convention. We have been down that road. Bait and switch.

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