Tag Archives: Taxes

We cut government w-a-y back. Taxes, too. Part 1

At home, fellow-citizens …  the suppression of unnecessary offices, of useless establishments and expences, enabled us to discontinue our internal taxes. these covering our land with officers, & opening our doors to their intrusions, had already begun that process of domiciliary vexation, which, once entered, is scarcely to be restrained from reaching successively every article of property & produce.
Thomas Jefferson’s Second Inaugural Address, March 4, 1805

Patrick Lee’s Explanation
Smart leaders sometimes do LESS, not MORE.
The President reported to the Congress on progress made during his first term. After a paragraph devoted to pursuing open and friendly relations with all like-minded nations, he turned his attention to domestic affairs.

Previous administrations had expanded the role of government and the taxes necessary to support it. Jefferson took the opposite position during his first four years, cutting unnecessary offices, expenses, and taxes . No longer were there “internal taxes,” ones levied by the government on its own citizens. Gone as well were the tax collectors interfering with citizens’ personal lives, or “domiciliary vexation.”  If those practices were not curtailed, the government’s appetite would eventually tax “every article of property & produce,” i.e. everything you own and everything you make.

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How will we spend the surplus?

that redemption once effected [paying off the national debt], the revenue thereby liberated may, by a just repartition of it among the states, & a corresponding amendment of the constitution, be applied, in time of peace, to rivers, canals, roads, arts, manufactures, education, & other great objects within each state. in time of war, if injustice by ourselves or others must sometimes produce war, increased as the same revenue will be by increased population & consumption, & aided by other resources reserved for that crisis, it may meet within the year all the expences of the year, without encroaching on the rights of future generations by burthening them with the debts of the past. War will then be but a suspension of useful works; & a return to a state of peace a return to the progress of improvement.
Second Inaugural Address, March 4, 1805

Patrick Lee’s Explanation
Wise leaders know being debt free opens lots of doors.
Jefferson anticipated a budget surplus and suggested this for the excess:
1. Some would be returned to the states on fair basis.
2. With a Constitutional Amendment, some would be spent on infrastructure, arts, education and commerce in peacetime.
3. In war time, increased consumption by an increasing population, along with other sources of income, would provide the revenue necessary for fighting.
4. War would be only “a suspension of useful works,” and peace would bring their return.
4. The present generation must not cripple the ones to come by passing present debt into the future.

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Let the rich pay all the taxes!

The remaining revenue, on the consumption of foreign articles, is paid chiefly by those who can afford to add foreign luxuries to domestic comforts … it may be the pleasure and the pride of an American to ask What farmer, what mechanic, what labourer ever sees a tax-gatherer of the US.? these contributions enable us to support the current expences of the government, to fulfill contracts with foreign nations, to extinguish the native right of soil within our limits, to extend those limits, & to apply such a surplus to our public debts, as places at a short day their final redemption …
Second Inaugural Address, March 4, 1805

Patrick Lee’s Explanation
Frugal leaders enrich their constituents.
An earlier post detailed how Jefferson was shrinking the overgrown government and eliminating the internal taxes required to support it. There was still one important source of tax revenue, though, customs duties on imported goods. Who paid those taxes? Only those prosperous enough to purchase non-necessities from Europe. The vast majority of citizens were tax-free.

The customs tax on the imported goods of the well-to-do provided enough revenue to pay the nation’s bills, domestic and foreign. Thus, Jefferson could now boast, along with his fellow citizens, “What farmer, what mechanic, what labourer ever sees a tax-gatherer of the US.?”

Should those customs duties produce a surplus, Jefferson had a plan for the excess, to reduce the public debt and hasten the day when America would be debt free.

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The taxman cometh NO MORE!

At home, fellow-citizens … the suppression of unnecessary offices, of useless establishments and expences, enabled us to discontinue our internal taxes. these covering our land with officers, & opening our doors to their intrusions, had already begun that process of domiciliary vexation, which, once entered, is scarcely to be restrained from reaching successively every article of property & produce.
Second Inaugural Address, March 4, 1805

Patrick Lee’s Explanation
Empowering leaders free their constituents from harrassment.
After foreign affairs, Jefferson turned his attention to taxes, a key issue on the domestic front. He thought the national government had expanded far beyond its authority. It took a lot of taxes on its citizens to run those operations. That, in turn, necessitated tax collectors “covering our land.”

What he called “domiciliary vexation” was taxation within one’s home and property. It had begun under the previous administration, and he put a stop to it. Otherwise, it would extend until “every article of property and produce” was taxed.

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5 steps to maintain public trust over public money

In our care too of the public contributions entrusted to our direction, it would be prudent to multiply barriers against their dissipation, by appropriating specific sums to every specific purpose susceptible of definition; by disallowing all applications of money varying from the appropriation in object, or transcending it in amount; by reducing the undefined field of Contingencies, & thereby circumscribing discretionary powers over money; and by bringing back to a single department all accountabilities for money, where the examinations may be prompt, efficacious, & uniform.
First Annual Message, November 27, 1801

Patrick Lee’s Explanation
Responsible leaders know the importance of protecting taxpayers’ money.
Deciphering this challenging passage, Jefferson laid out to Congress specific strategies for making sure that taxes weren’t wasted:
1. Set amounts of money should be appropriated for specific purposes
2. No spending for anything outside those purposes
3. No spending in excess of what was agreed upon
4. Minimize undefined purposes, limiting discretionary power over spending
5. Have one department responsible for accounting for all funds in a timely and uniform manner, to assure items 1 through 4 were carried out.

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Beware! The government will tax you into poverty!

… considering the general tendency to multiply offices and dependancies, & to increase expence to the ultimate term of burthen which the citizen can bear, it behoves us to avail ourselves of every occasion which presents itself for taking off the surcharge [internal tax]; that it never may be seen here that, after leaving to labour the smallest portion of it’s earnings on which it can subsist, government shall itself consume the whole residue of what it was instituted to guard.
First Annual Message, November 27, 1801

Patrick Lee’s Explanation
Wise leaders keep a tight rein on government spending, for good reason!
This was the first of eight annual messages Jefferson would deliver, what we now call “State of the Union” addresses. He ended the precedent established by the two previous Presidents, who delivered their messages to Congress in person. Jefferson submitted his in writing, instead. He thought a President arriving at Congress with pomp and ceremony was too much like a King before the Parliament.

Nearly nine months into his administration, he acknowledged government’s natural tendency to increase its size, budget and reach. He was intent on reducing all three. Otherwise, our government would come to mimic those of Europe, which left its citizens just barely enough to live on and taxed away all the rest.

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More freedom or more taxes for American labor?

with all these blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow-citizens — a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.
1st Inaugural Address, March 4, 1801

Patrick Lee’s Explanation
Empowering leaders encourage citizens’ industry and protect their labor.
In recognition of Labor Day, 2015, celebrated yesterday:
Acknowledging Providential blessing on America, what more was needed? “A wise and frugal government” whose intrusion was minimal, limited to restraining people from hurting one another. Beyond that, people should be left to their own “industry and improvement.” Government “shall not take” (read: tax) the fruit of their labor.

The government’s footprint during the Washington and Adam’s administrations had extended beyond what Jefferson thought proper. So had the taxation necessary to pay for it. He sought an elimination of internal taxes and reported that accomplished in his second inaugural address four years later.

How was government to support its limited functions? By duties (taxes) on imported goods. Only those with significant disposable income could afford luxuries from Europe. That put the tax burden on the well-to-do, leaving ordinary Americans exempt from the tax collector.

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What do laborers need on Labor Day?

…  with all these blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow-citizens — a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities [happiness].
Thomas Jefferson’s First Inaugural Address, March 4, 1801

Patrick Lee’s Explanation
Laborers need a hands-off government.
Jefferson saw the election of 1800 as the second American revolution. The voters rejected an activist national government and the taxes necessary to support it. They also rejected a fondness toward England and any possibility of a constitutional monarchy.

Jefferson’s inaugural address outlined the major principles which would guide his administration. He tried to bridge the gap between the political parties with this, “We have called by different names brethren of the same principle. We are all Republicans, we are all Federalists,”

Jefferson proposed a government which was wise, frugal, and intervened only to keep people from harming one another. Beyond that, government should let its citizens self-regulate for their own “industry and improvement.” Free to prosper in this way, government should not tax away what Americans labored to produce.

There were a number of taxes in 1801. Four years later, in his Second Inaugural Address, Jefferson would boast about the elimination of that burden when he asked “…what farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States?”

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WHO should pay taxes? WHY? HOW?

The remaining revenue on the consumption of foreign articles, is paid cheerfully by those who can afford to add foreign luxuries to domestic comforts, being collected on our seaboards and frontiers only, and incorporated with the transactions of our mercantile citizens, it may be the pleasure and pride of an American to ask, what farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States? These contributions enable us to support the current expenses of the government…
2nd Inaugural Address, March 4, 1805

Patrick Lee’s Explanation
Self-limiting leaders restrict taxation to those who can afford it.
The previous post detailed Jefferson’s efforts to reduce the size of government and the taxes necessary to support it. Those were internal taxes, ones imposed on everyday people and things.  Those everyday people could now delight in asking, “what farmer, what mechanic, what laborer, ever sees a tax-gatherer of the United States?”

On what, then, was tax imposed?  On “the consumption of foreign articles,” i.e. imports.
On whom was the tax imposed? On “those who can afford to add foreign luxuries to domestic comforts,” i.e. the middle class, the wealthy, those who had money to spend on extras.
That limited taxation to edges of the country, the sea coast and the frontier. The tax was collected by merchants as they sold the goods.

He went on to write that any surplus was to be applied “to our public debts.” Once the debt was paid, he suggested that a Constitutional amendment to allow sharing federal funds with the states for the purposes of “rivers, canals, roads, arts, manufactures, education, and other great objects within each state.”

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Tax collectors & plagues of locusts have what in common?

At home, fellow citizens, you best know whether we have done well or ill. The suppression of unnecessary offices, of useless establishments and expenses, enabled us to discontinue our internal taxes. These covering our land with officers, and opening our doors to their intrusions, had already begun that process of domiciliary [home] vexation [harassment] which, once entered, is scarcely to be restrained from reaching successively every article of produce and property.
Second Inaugural Address, March 4, 1805

Patrick Lee’s Explanation
Careful leaders know unrestrained government will overwhelm its citizens.
As President Jefferson began his second term, he reported on accomplishments of the first four years. This excerpt deals with the scope of government and the taxes necessary to support it.

He asked his fellow citizens to judge how well they’d done at reducing unnecessary government functions and expenses. Less government meant the need for fewer taxes. The end of “internal taxes,” those imposed on goods and services within the country, was proof of their success.

Note the harm Jefferson attached to growing government and rising taxes. If not checked, the time would come when “every article of produce and property” would be subject to taxation.

If not internal taxes, from where and whom would government raise its necessary revenue? That will be subject of the next post.

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