Jefferson’s view on Taxation
Did you know for the first 140 years of the America (1776-1916) there was virtually no direct taxation on American citizens? In 1802 when Thomas Jefferson took office he eliminated all direct taxation on US citizens. Tax free America. This was Jefferson’s vision and I have quotes from him to back it up.
There were times in US history, like war, when it came back temporarily but the federal government was established to protect citizens against the burden of government. There were some excise taxes and duties on foreign imports but government was kept to a minimum and each person was free and responsible for their own life. This was the vision on the founding fathers for establishing the United States of America.
During the tax free time in America, citizens rich, poor and middle class of the United States grew richer and there was no social state, which was seen by the founding fathers as the road to serfdom. The whole world envied the US and tried to immigrate. If you want to read even more on the history of taxation in the United States including Jefferson’s views on taxation the US Treasury has an article.
Jefferson on taxes: they are wrong
Jefferson’s view on taxes were clear, they were wrong. I think it is better to look at people’s original words so I have put together some quotes by Jefferson on the issue. Jefferson believed large debt and direct taxes were a curse and something to be avoided as it was the source of oppression. Jefferson was one of the founding fathers whose vision of the United States was one of freedom for people to live their lives without the excess burden of government.
And the forehorse of this frightful team is public debt. Taxation follows that, and in its train wretchedness and oppression.
Thomas Jefferson in his state of the Union wrote about the “the freedom of labor from taxation”. He felt government should protect its citizens from internal taxation.
Thomas Jefferson believed in times of war when a nation was fighting for its survive with enemies at the gate it could raise capital, but it should be paid off as soon as possible and with least burden to its citizens.
I can not but hope that Congress in reviewing their resources will find means to meet the intermediate interest of this additional debt without recurring to new taxes, and applying to this object only the ordinary progression of our revenue. Its extraordinary increase in times of foreign war will be the proper and sufficient fund for any measures of safety or precaution which that state of things may render necessary in our neutral position.
Jefferson continued to write addressing the Nation:
Direct taxation was to be avoided, this could be done by avoiding expense that are not necessary. when merely by avoiding false objects of expense we are able, without a direct tax, without internal taxes, and without borrowing to make large and effectual payments toward the discharge of our public debt and the emancipation of our posterity from that mortal canker, it is an encouragement, fellow citizens, of the highest order to proceed as we have begun in substituting economy for taxation, and in pursuing what is useful for a nation placed as we are, rather than what is practiced by others under different circumstances.
Jefferson even did not like the idea of accumulating wealth for a treasury for times of war in case it happened.
…but sound principles will not justify our taxing the industry of our fellow citizens to accumulate treasure for wars to happen we know not when, and which might not, perhaps, happen but from the temptations offered by that treasure.
Jefferson recommend no internal taxes on the citizens of the United States:
there is reasonable ground of confidence that we may now safely dispense with all the internal taxes.
Jefferson Vs Hamilton on the role of government
When I was in high school and first read about the Hamilton and Jeffersonian views of America, I thought only hippies and people who did not understand economics would side with Jefferson. Clearly we needed a strong central bank, treasury and debt to finance the government, centralised financial markets. Jeffersonian views of a libertarian America seemed too radical for me. I was 16 years old in high school when I thought that. Now that I have studied economics and lived in the world for at least 30 years, I realize the opposite. The government that governs least governs best. If the freedom and prosperity of the citizens are to be protected no or low taxes and debt are clearly the way to go.
Economically speaking it is a question of who can spend your money better, you or the government? Why did Jeffersonian America prosper and not fall apart without taxation? The reason is what Jefferson wrote was correct.
Jefferson’s letters and original writings on taxes in the USA
1787 to James Madison about the issue of taxes:
…the fundamental principle, that the people are not to be taxed
Jefferson’s letter to John Jay in 1789 (August 27th):
The embarrassments of the government, for want of money, are extreme.
What does this seem like to you? If you can find Jefferson quotes to the contrary please let me know. Why does the current President not understand this?
Jefferson when on to write to John Taylor in 1789:
I wish it were possible to obtain a single amendment to our constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its constitution; I mean an additional article, taking from the federal government the power of borrowing.
In 1799 Jefferson when on to Edmund Pendelton about:
the disgusting particularities of the direct tax.
In 1801 to John Dickerson Thomas Jefferson wrote on taxes:
You will perhaps have been alarmed, as some have been, at the proposition to abolish the whole of the internal taxes. But it is perfectly safe. They are under a million of dollars, and we can economize the government two or three millions a year.
Hand written by Thomas Jefferson
My view’s on Taxation
- As an economist I think a tax on consumption, is the least offensive as it does not discourage investment and savings and productive effort.
- I pay taxes in the EU and the US as I am a dual citizen, I do not like it. I think it is unfair. I agree with Jefferson. The absence of direct taxes made the US great.
- ‘No country was every taxed into prosperity’ – Ronald Reagan
- Government wastes more money than any private person or company ever could.
- Taxation is a violation of your life, if you work more than 1/2 (aggregate all the taxes including sales and loss of productivity indirectly related to taxes etc) your life for your neighbors wife this is unfair. This is what taxes are, working for your neighbor’s wife. How do you feel about that?
Thomas Jefferson was not a saint, but he was enlighten.
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11 responses to Thomas Jefferson on taxes
Direct Taxes and Article 1, Section 2
Great article! Don’t forget that prior to 1913 and the creation of the 16th amendment, the Federal government had no authority to directly tax the people. All “direct” taxes were levied against the States according to Article 1, section 2:
“Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers…”
Also, Lincoln was the first to institute a direct tax on the people as an income tax, he did so in violation of the US Constitution as the Federal government had no authority to do so.
Matt, thank you for the comment. It amazes me how many people just assume just because we have taxes now, it must have always been this way. No it was not. Direct taxes make the US poor and are questionable in terms of the constitutionality. I have to pay them as I believe in the law, but that does no mean I have to like it.
This is a very selective set of quotations. Jefferson was in favor of a radically progressive tax code. Yes, he wanted elimination of “internal taxes”, but you neglect to mention his justification for this which he spells out explicitly in quotes that you fail to mention.
In particular, he wanted high taxes on imports because at that time consumption of imports was mainly by wealthy elites. He thinks the rich should be taxed heavily to avoid America trending towards an aristocracy of economic elites (compare to present day corporatism and wealth disparity).
If Jefferson were around today he would not necessarily pursue the same means to the end of progressive taxation, yet you mislead the reader by suggesting that Jefferson’s positions are an end in themselves rather than a means to specific ends which are adapted to his historical context and not immediately transferable to ours.
Thomas Jefferson and direct taxes
If you aggregate local, state and Federal direct taxes, in addition to property taxes, fees and sales taxes as well as import taxes that exist today, also the debt, which is a form of taxation and quantitative easing, which is another form of taxation, I have no question that Thomas Jefferson think your interpretation is way off base. No way could Thomas Jefferson have even imagined the oppressive government debt ridden government that exists today.
Progessive taxation is not bad, it is the idea of direct taxation in general. This idea of working for another man’s wife and forcing redistribution of wealth is what I think is twisted. There are much better ways to raise tax revenue for the finance of small government.
I respect you position and but it is only remotely plausible because direct taxation and other forms of taxes as they exist today did not even start until just before WWI with small exceptions like the Civil War.
What is direct taxation? Direct taxation, is a penalty for productive activity which is something radically different from an import duty which is about consumption.
You want to argue agaist having an elite in the USA and invoke Jefferson? Come live where I live, in Eastern Europe. The ultimate abuse of power is when government tries to make everything more fair and equal. Wrong. I invite you to live in a post communist country. The poor in the USA are to me like super rich. Come live where I live.
Excellent on taxation
The current form of taxation is the defintion of tyranny; According to the American Heritage Dictionary:
n.
The unlawful use or threatened use of force or violence by a person or an organized group against people or property with the intention of intimidating or coercing societies or governments, often for ideological or political reasons.
That describes taxation to the letter; “threatened use of force…by…an organized group against people or property with the intention of intimidating [and]or coercing societ[y], often for… political reasons.” (Changes mine… to emphasize the point)
Can you imagine instead of the Obama stimulous we gave everyone in the USA a tax holiday. It would net out the same in terms of debt, but this time, you keep your money and invest, save and spend as you like.
You do realize that roughly 1/3 of the stimulus plan was tax reductions on business and the middle/low income classes right? Jefferson was a staunch advocate of small/minimized military forces and the oppression of large corporations being intertwined with government.
I too would enjoy the full context of your quotes.
I have no problem with what you write about reducing taxes and the government, in fact I am for the dismantling of the industrial military complex, which does nothing for long-term advancement of the economy. corporations can be big but they are in bed too close with big government. However, 1/3 being tax reductions is not radical enough. Why not balance the budget by cutting government and reducing taxes at the same time and not get involved with stimulus. Stimulus is nothing more than giving a sick person ten cans of energy drinks. I mean for the moment it may see like a good idea but there will be a cost in terms of long-term health.
To fix USA fiscally, change to consumption tax=FairTax
We have lost our industrial base over the past 30 years and are to the end of our rope. If we do not correct our free trade policy by shedding our old closed border tax structure, we will not recover.
If we want to recover, we have to simply reduce the burden of government. Government job creation or industrial policy is a joke and a poor one at that.
People have to understand that government does little but sap the energy and vitality out of the free market job creation engine. Every government or State agency I have dealt with has very marginal service and questionable purpose.
Why not eliminate the income tax for example? And cut most of government, the world would not end.
I also think the USA is far from over. America is so rich it is hard for someone who has not lived outside of the USA for a while to imagine the wealth of America.
What was the original reason for income tax?:
What was the original reason for income tax?:
Answer: “WAR”
Would we have Corporatism and Crony Capitalism with out Income Tax?
Answer: No way.
Follow Income Tax Money toward the Military Industrial Complex , the Heat-Care Industrial Complex, the increasing welfare state and its bureaucracy and so many others conflict of interest and you know this is an immoral hoaxes to finance what a nation of freemen would never agree to finance on voluntary basis.
That is why your so called Income Tax Duty needs to be imposed by force. That same force is finance with you income tax payments. Above all Jefferson was against Tyrants.
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