Section #9: The "Watch Phrase" of the American Revolution ...
NO TAXATION WITHOUT REPRESENTATION. A Capsule Summary of Taxation in Colonial America and the Initial Years of the American Republic.
The following is a capsule summary of taxation of England's American colonies from roughly 1715, through the start of the Revolutionary War in April 1775.
But first, a brief focus on the two constitution-type documents the USA has had, and how each of those constitutions raised money for the governments they created.
The first constitution-type document was the Articles of Confederation (the A of C). The drafting of the A of C was completed on November 15, 1777. The Articles were then ratified (approved) by all 13 aspiring States. They went into effect March 1, 1781.
Our Constitution of today was drafted in the Summer of 1787, then signed on September 17th. The Constitution was considered ratified on June 21, 1788, with New Hampshire being the ninth State approve it, as the replacement for the A of C.
In the 50 years leading to the outbreak of what ended up being the Revolutionary War (April 1775) the British Parliament passed various laws, both taxation and non-taxation, affecting the 13 American colonies.
Many of these laws were disliked in the colonies. This dislike culminated with the Stamp Act of 1765. Although the Stamp Act was repealed in less than a year, it had the effect of galvanizing the thinking about the whole relationship between/among the 13 colonies, England's King George, and the British Parliament.
The colonies had no elected representatives in the British Parliament. Therefore, officially, there was no one speaking for the 13 in determining policies and legislation affecting them. There was good reason for the colonists to think of King George, and all, as being distant, far off, and unresponsive.
Through this period, the "Watch Phrase" leading up to, and through, the Revolutionary War became, "No Taxation Without Representation."
The Declaration of Independence was signed July 4, 1776. The Revolutionary War had been underway for over a year, since the patriots at Lexington, and Concord, Massachusetts faced off against the British regular army in April 1775.
As the Revolutionary War continued, the colonies realized they needed to set up some kind of 13-party "working agreement" to effectively fight the War.
The A of C was, in effect, that working agreement.
The 13 had bad tax experiences with the distant government in England. The 13 new States did not to want to have an A of C government that could inflict on them bad tax policies as had Parliament. Therefore, the "Union" Government under the A of C was NOT granted taxing power. Borrowing was allowed only if nine States approved.
So how did the Union government under the A of C get money to operate? Article 8 of the A of C outlined how the money would be raised using a "pass through" taxation system controlled by the States. Article 9 addressed borrowing.
Under Article 8, the "common expenses" of operating the government were divided among the 13 by an agreed upon formula. Each state legislature taxed its citizens/residents to raise the money to pay its ratable share.
This Article 8 approach, by its very design, kept a tight control on the Union government. The States kept a close eye on what expense items were included in the "common expenses" that were to be divided among them.
Next, to the 1787 Constitution. What was done regarding raising money for the new National/Federal Government? ("the Feds").
Through Article I, Section 8, Paragraph (I-8-1), the Feds, through Congress, were granted monopoly control over their own taxing power. I-8-1 states: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, ...." The States were no longer the "funding agents" for the Feds.
I-8-2 authorizes Congress "To borrow money on the credit of the United States;"
The A of C and the Constitution took 180 degree opposite approaches to raising money for their respective governments.
Granting taxing power to the new proposed government under the Constitution was heavily debated during what ended up being a nine-month ratification process leading to the Constitution's approval.
The "Federalists" wanted the new government to have taxing power. The "Anti-Federalists" were opposed to granting taxing power. (Please see section seven, the "4 Reasons" section, for various warnings the "Anti-Feds", wrote about granting national/federal taxing power. (Especially note Anti-Federalist Paper Brutus #5). The warnings contained in Brutus #5 seem to clearly be a prophesy of what we are living with today).