Mr. D. said the para in debate related only to the rule of apportioning internal taxes, but gentlemen had gone into a consideration of the question, whether Congress should have the power of laying and collecting such taxes; which he thought would be more properly discussed under the section relative to the Powers of Congress: But as objections had been suggested- the answers might be hinted as we went along. By the old articles, said he, Congress have a right to ascertain what sums are necessary for the union, and to appropriate the same- but have no authority to draw such monies from the States. The States are under an honorary obligation to raise the monies- but Congress cannot compel a compliance with the obligation; so long as we withhold that authority from Congress, so long we may be said to give it to other nations- Let us contemplate the loan we have negociated with the Dutch, our ambassadour has bound us all jointly and severally to pay the money borrowed. When pay day shall come, how is the money to be raised? Congress cannot collect it; if any one State shall disobey requisition, the Dutch are left in such a case to put their own demand in force for themselves. They must raise by arms what we are afraid Congress shall collect by the law of peace. There is a prejudice, said Mr. Dawes, against direct taxation, which arises from the manner in which it has been abused by the errours of the old Confederation. Congress had it not in their power to draw a revenue from commerce, and therefore multiplied their requisitions on the States. Massachusetts, willing to pay her part, made her own trade law, on which the trade departed to such of our neighbours as made no such impositions on commerce: Thus we lost what little revenue we had, and our only recourse was, to a direct taxation. In addition to this, foreign nations, knowing this inability of Congress, have on that account been backward in their negociations, and have lent us money at a premium which bore some proportion to the risk they had of getting payment; and this extraordinary expense has fallen at last on the land- Some gentlemen have said, that Congress may draw their revenue wholly by direct taxes; but they cannot be induced so to do; it is easier for them to have resort to the impost and excise: But as it will not do to over-burthen the impost, (because that would promote smuggling, and be dangerous to the revenue) therefore Congress should have the power of applying, in extraordinary cases, to direct taxation.3
War may take place, in which case it would not be proper to alter those appropriations of impost which may be made for peace establishments, it is inexpedient to divert the publick funds, the power of direct taxation would in such circumstances be a very necessary power.
As to the rule of apportioning such taxes, it must be by the quantity of lands, or else in the manner laid down in the paragraph under debate. But the quantity of lands is an uncertain rule of wealth- compare the lands of different nations of Europe- some of them have great comparative wealth and less quantities of lands, while others have more lands and less wealth. Compare Holland with Germany. The rule laid down in the paragraph is the best that can be obtained for the apportionment of the little direct taxes which Congress will want.4