The Federalist Paper number twelve, written by Alexander Hamilton, speaks about revenue. Hamilton started with the benefit of the Federal Government creating a national currency for commerce, instead of States having their own currency. The paper discusses the need to tax the people through indirect measures, rather then having a tax collector. This, as well, would be better fit for the Federal Government rather then the State. Hamilton compares the United States with France and Britain pertaining to collection of taxes. The indirect taxes would be on duties, which should be collected by the national treasury, rather then the State treasury. This, Hamilton believes, would be needed if the country is to survive.
In creating a national currency, Hamilton believes, there would be an invigoration in industry. Workers would look forward to accomplishing their professions in order to receive their compensation. This would increase commerce, which would increase the value of the land, and increase the circulation of money. With the circulation of money comes more in taxes, which would keep the national treasury full. Hamilton compared this to another resource wealthy nation, Germany. Germany had gold mines that were not put to good use. There was no money in the treasury and the King of Germany owed money and did not have the capital to sustain war. The United States, under Hamilton's goals, would not encounter Germany's situation.
Hamilton focuses on the lack of success States would have if they continued collecting taxes in place of the Federal Government. State treasuries were empty, according to Hamilton. in order to increase the amount of revenue the government has, the Federal Government must collect indirect taxes, specifically from duties. Hamilton again compares the United States to other countries, this time and Britain, which collected their taxes mainly through indirect taxes. This direct tax would be easier to collect then direct taxation of the people.
The taxation of duties should not be done by the States against other States, or even against other nations. Hamilton argued that it would be impractical to do so. He used France as an example. France's proximity to Britain, Spain, and Portugal allows illicit trade to occur. As a result, France had to patrol north, south, east, and west. France had an army of patrol officers. If the States did not collect duties from other States and if the Federal Government was in charge of taxes, the States would not have to patrol all the waterways, rivers, and borders. It would be impractical and costly. It would drive the cost of patrolling up and it would be hard to catch every illicit cargo. This would ensure the treasury of the State would in fact be empty. If the Federal Government was in charge of collecting this tax, it would make the cost of enforcement cheaper, and it would ensure the treasury would have revenue. The Federal Government only has to patrol the Atlantic Ocean with a few officers. The fact that foreign countries were far from the United States makes patrolling much easier.
Hamilton believed that it was essential for the Federal Government to be in charge of the collection of taxes. If the States collected taxes, there would not be much taxes collected. If the Federal Government collected taxes, and tripled the tax rate, still making it under France and Britain. The United States would be at nine percent, with France being at fifteen and Britain even higher. Hamilton believed that if the Federal Government did not control the taxes, the American Revolution would have been fought in vain.
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