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The Founders on Taxation

January 29, 2019

It’s amusing the way the media feels it necessary to treat whatever Congresswoman Alexandria Ocasio-Cortez says as serious political economy.

It’s amusing the way the media feels it necessary to treat whatever Congresswoman Alexandria Ocasio-Cortez says as serious political economy. Most recently, an income tax rate of 70 percent. To buttress the latest oracle from the Bronx, the media argues that “the Founders” would approve of such a tax rate, in proof of which they provide quotations from Thomas Jefferson and Alexis de Tocqueville.

With apologies to those who believe that history along with gender and climate science are social constructs, between Jefferson and de Tocqueville, there is only one Founder. De Tocqueville was not a Founder, but was an early observer of our country. In Democracy of America, he describes the strength of the country as being in the common people. What would require a nobleman in France, would be done here by the people, whether our local government, our churches and charities, or our businesses. “America is great,” he said, “because America is good.” That was a long time ago.

Thomas Jefferson, the lead author of our Declaration of Independence, was indeed a Founder. He was one of the foremost among the Founders, but he was not the only one. So were George Washington, James Madison and Alexander Hamilton. Perhaps John Marshall should also be included. We should describe their views either as stated in their joint pronouncements, such as the Declaration of Independence, and the laws, such as the U.S. Constitution, to which they agreed; or, as the range of views they expressed as participants in the debates of the day. It is intellectually dishonest to take a quote out of context as though it were a definitive representation of the Founders.

The Declaration famously declares that all men are created equal and endowed with certain unalienable rights among these are life, liberty and the pursuit of happiness. It says that governments are organized by men to secure these rights; and, that when a government becomes abusive of these rights, it is the right, no, the duty of the people to alter or abolish it. It then lists a series of abuses. Inequality was not included in the series of abuses.

The U.S. Constitution was adopted a few years following the War of Independence in order to form a more perfect union. It gave to the Congress the power to tax imports (or, tariffs) and to tax excises (the most significant of which was alcohol). Were Congress to levy a direct tax, it would have to be in proportion to population. So, progressive income taxes were not in the scheme of things. It would only be in the 20th Century that the 16th Amendment gave Congress the power to tax income.

So, neither the Declaration nor the Constitution was based on contemporary concerns for Social Justice, Deep Equality, or any other form of populist greed. The Founders, as a group, were quite aware of the potential evils of unrestrained democracy and, so, fashioned a republic, with checks and balances and - in most states – with a property qualification for voting.

Now we come to Jefferson, both as one of the Founders and as the leader of the Jeffersonian Republicans. Jefferson, as an individual, was something of an aristocrat, born into privilege, who used his wealth to advance knowledge as well as to be involved in the political life of his state and nation. Perhaps because he was not as attentive to his business of farming as Washington was, Jefferson dissipated his wealth and died in debt. Thus, the personal tragedy that he could not follow the example of Washington and free his slaves in his will.

The Jeffersonian Republicans tended to favor freeholders, either rural farmers and owners of at least a modest acreage or urban mechanics and owners of at least a city plot. In contrast, the Federalists, as lead by Alexander Hamilton, tended to favor manufacturers, commerce and banks. For most of U.S. history, the two major parties represented the divergent interests of these two broadly-defined productive classes. But, not any longer. Today, our political axis mostly reflects the divergent interests of those who pay taxes and those who are paid by taxes. Our government mostly exists to rob Peter to pay Paul, leaving Peter and Paul scrambling to get out the vote on election day.

Article Tags
Taxes
Author
Clifford F. Thies is the Eldon R. Lindsay Professor of Economics and Finance at Shenandoah University. He received his Ph.D. in economics from Boston College.
cthies@su.edu