On August 4th, 1790, Congress passed "An Act making provision for the Debt of the United States". This was part of the Compromise of 1790 which landed our new capital between Maryland and Virginia while Hamilton got his wish to assume the debts incurred by the states during the revolutionary war. To pay for the debt, the newly formed government issued securities,and in 1791 the first federal excise tax. The so-called "whiskey tax" was the first tax imposed on a domestic product and became law in 1791. The tax applied to all distilled spirits, but whiskey was by far the most popular distilled beverage in the 18th-century U.S. and because of this it became widely known as a "whiskey tax". In his third State of the Union Address, President Washington addressed this new power to tax the people.
"The powers specially vested in me by the act laying certain duties on distilled spirits, which respect the subdivisions of the districts into surveys, the appointment of officers, and the assignment of compensations, have likewise carried into effect. In a manner in which both materials and experience were wanting to guide the calculation it will be readily conceived that there must have been difficulty in such an adjustment of the rates of compensation as would conciliate a reasonable competency with a proper regard to the limits prescribed by the law."This was a major shift of power from states to the central government. Prior to this, states were burdened with debt and were forced to collect taxes. But now, both the debt and the need to tax was shifted to the central government. States would now be reliant upon federal assistance than taxation. In 1791, Congress may have debated the constitutionality of taxes, but the average farmer just saw this as a new way to take their hard-earned money. As Washington pointed out, "the novelty, however, of the tax in a considerable part of the United States and a misconception of some of its provisions have given occasion in particular places to some degree of discontent". In other words, the people did not trust their government to make proper use of their money. Washington continued, pointing out the need to win over the trust of the people.
"but it is satisfactory to know that this disposition yields to proper explanations and more just apprehensions of the true nature of the law, and I entertain a full confidence that it will in all give way to motives which arise out of a just sense of duty and a virtuous regard to the public welfare."Was Washington being sincere when he said he was confident that this power would give way to a "just sense of duty" and a "virtuous regard to the public welfare"? Perhaps, it was now up to Congress to win the trust of the people. They had to "unite with a steady and firm adherence" to the constitution, providing only the "necessary acts of Government", and distributing the revenue in a way that best fits the desires of all communities.
"It is desirable on all occasions to unite with a steady and firm adherence to constitutional and necessary acts of Government the fullest evidence of a disposition as far as may be practicable to consult the wishes of every part of the community and to lay the foundations of the public administration in the affections of the people."There you have it, George Washington's principles on taxation.
- Serve the people
- Virtuous regard for public welfare.
- It must be constitutional
- Collect only what is necessary
- Distribute revenue to best fit desires of all communities
http://www.presidency.ucsb.edu/ws/index.php?pid=29433
https://en.wikipedia.org/wiki/Funding_Act_of_1790
https://en.wikipedia.org/wiki/Whiskey_Rebellion
http://imagehost.vendio.com/preview/ha/haats/HW1878P176241.jpg
https://upload.wikimedia.org/wikipedia/commons/8/88/Portrait_of_George_Washington.jpeg
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