Thomas Jefferson on taxes

Jefferson’s view on Taxation

Did you know for the first 140 years of 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 the government was kept to a minimum and each person was free and responsible for their own life. This was the vision of 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 was 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 the government should protect its citizens from internal taxation.

Thomas Jefferson believed in times of war when a nation was fighting for its survival 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 recommends 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, centralized 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.

Jefferson's views independence — Hand was 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 enlightened.

Posted

Politics

Mark Biernat

This is my Youtube Channel: EconLessons

Comments

43 responses to “Thomas Jefferson on taxes”

Matt

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.

Reply
1. Mark Biernat
  
  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.
  
  Reply
  1. Pete
    
    @Mark: You believe in the law…so if slavery were “legalized” again, you’d support it? Aren’t morals more important than the law? Haven’t there been countless atrocities committed that were perfectly legal?
    
    Reply
    1. Mark Biernat
      
      Yes I agree. Moral code is even higher than the law. How can I argue with that. I mean look at Germany in the 1940s or countless other examples. An your point is correct, we had slavery in the USA for a long time. The question is now, what laws are in our society that are immoral? I can think of a few.
      
      Reply
jrshipley

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.

Reply
1. Mark Biernat
  
  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.
  
  Reply
  1. Kathy
    
    Some of us are okay with taxes that support the programs that we need: police, fire, military, National Institutes of Health, Homeland Security, Immigrations, national parks, etc.
    
    Reply
    1. Mark Biernat
      
      Anything government bureaucracy can do, people can do more efficiently. It looks like we will hit 24 trillion dollars of debt.
      
      When this happens it is the point of no return. Do you understand what this mean? Do you really understand?
      
      A blanket statement like we need all these services is not a precise statement.
      
      There are many things that have been done and are still being done privately by many countries.
      
      Why must the government big mother, taking care of all the people who mostly choose a life of dependency.
      
      Did not the people who started this country, hack their way out of the wilderness and bury their dead along the way? They left the security of jolly old England to seek a life of freedom.
      
      For example the health care system now that it has been socialized is a disaster. I don’t use it. I would rather pay cash privately. Why should I subsidize the use of so many painkillers, people taking advantage of the system, and doing unethical things?
      
      When it comes to most of the services that we think of police, fire, schools and even roads these are done on a local level not a massive government 20 trillion dollar that level.
      
      For example schools , better than having a large public school system which indoctrinated children with nonsense political correctness and teaches global warming, better is a school voucher system which dress is private schools.
      
      I don’t think you understand that once we can no longer pay are obligatory payments on the debt, there will be no Great America.
      
      If we want a strong defense we need to be able to pay our debt. If we want a robust economy we need to be able to pay the interest on our debt. I believe in the free market and almost every situation which the government bureaucracy presents the free market can do it better.
      
      Reply
    2. john blue
      
      Only if it is a consumption tax. Not on Food & Medical.
      
      Reply
2. Nick
  
  Corporate taxes and tax on interstate commerce is the appropriate form of federal tax and are the key beneficiaries of our complex strong central government. Yet the Rockefeller Republicans keep trying to offset the burden to working poor. It’s constantly turns upside down by a gullible and twisted right wing media.
  
  Reply
Steve

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)

Reply
1. Mark Biernat
  
  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.
  
  Reply
  1. Jeremy
    
    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.
    
    Reply
    1. Mark Biernat
      
      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.
      
      Reply
RGeorgeDunn

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.

Reply
1. Mark Biernat
  
  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.
  
  Reply
  1. glesson
    
    Your bias clouds your integrity
    the greatest job creator was a government official
    
    Rebuttal to what? the keen insight that national socialism was a left wing ideology?
    only from your stand point
    
    Ayn has a lot to answer for:
    
    A better society through absolute selfishness?
    
    Reply
    1. Mark Biernat
      
      I believe humans are innately good and when they act on their enlightened self interest society as a whole is better off than can be socially engineered under national socialism or socialism or the Democratic party.
      
      Reply
2. glesson
  
  Maybe, except that back in the days when this worked, the rest of the world wanted to buy American goods – there was little competition in a war ravaged world.
  Now American imports from manufacturers – is there enough of an industrial base left to provide for the domestic market and to survive? overseas markets will not sit still to be disadvantaged like that (in the past the disadvantage was going the other way, but it was us policy to have that).
  
  And there’s wall street, it would be like being locked in a cage with a very hungry wolverine.
  
  Reply
  1. Mark Biernat
    
    Your thinking about economics like it is a macro machine. Imports and manufacturing base and the language of politicians. The reality is economics is what me and you do together. Americans need to understand this. There is no economy. It is just me and you trading with each other. You grow organic tomatoes and I create a better mouse trap. It does not matter where you are from or I am from. We have a common interest that will benefit both of us.
    
    Reply
3. EDWARD GUCKER
  
  Take a look at “financialization” of our economy. It won’t take you long to understand why we are not the producers we once were.
  
  Reply
  1. Mark Biernat
    
    The world is shifting so rapidly, being a producer does not mean cars and steel, but rather biotech and IT such as Google, this we still are.
    
    Reply
Adam

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.

Reply
1. Jewel
  
  Don’t forget who started the world wars. It wasn’t capitalists, and it was the progressives who argued for the taxed state. Capitalists could have financed our defense/defense of others without direct taxation. It’s amazing how much (we evil) capitalists can cough up when it’s for a good cause, and how the rest of the world turns to us when they are hungry or need defending. Our “government” – which is really the American people, is now financing turtle crossings in California and studies that look into how cow farts impact global warming. Hmmmm. I don’t think either Jefferson or Hamilton would approve. If California is worried about their turtles becoming road kill,then the taxpayers of CA can pay for it. Leave my wallet alone. As for global warming – I still don’t understand how the polar icecaps melted during the interglacial period when there were no capitalists around to pollute the world. Must’ve been those cows.
  
  Reply
  1. Mark Biernat
    
    In a liberal (classical liberal, like the founding fathers) society it is pretty well establish that charitable donations increase. In a socialist society people do not tend to give to charity. I think it is because they are being forced to via the tax system.
    WWII was a struggle between national socialism and soviet socialism.
    With broad strokes of the brush we could go on, I wish there was one modern day lib that would write a rebuttal here, but to date no one from the modern left can come up with an arguement that will hold water.
    
    Think about it, both domestically and internationally a society that is committed to the principles of individual liberty rather than trying to engineer the ‘common good’ at home and around the world will result in a society that is better off. I believe after living under the yoke of the British Empire the founding fathers like Jefferson understood this.
    
    Reply
Rick Majors

The Constitution puts direct taxes on the states according to their population’s percentage of the national pop. (Apportionment). Direct taxation on people is slavery. The federal govt. is to directly tax its members. It’s members are states not human beings. I am not a state.

Reply
Rick Majors

The 16th Amendment gives no new powers to govt. according to the Sup Court. It merely confirms that foreign earned incomes (profits) could be taxed like other tariffs at the national borders even if the owners were Americans and did not need to be apportioned just like tariffs are not apportioned.

Congress and corrupt and ignorant presidents’ propaganda as well as a lazy public over the last 100 years have resulted in the tyranny we now have. Ask yourself, is extortion really a tax?

Is the price of freedom to lose your freedom? Why bother paying the price?

Reply
1. EDWARD GUCKER
  
  “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” It seems quite broad to me; incomes of any nature, and why the consideration over national population statistics if it was only about trade income?
  
  Reply
Freedom

Historically, when we had strong import and excise taxes, we had prosperity and high living standard. Every time we opened borders to free trade, we lost prosperity and industries.
Also, title 26 is just an extension of the public salary tax act, Any one working for the government getting taxed. Do you work for the gov?
Another problem is the social security number, it made you subject to the federal gov by way of the unconstitutional 14th amendment . We became subject to our creation. We really have God given Unalienable Rights, not 14th amendment government granted inferior civil rights.
SS#’s are are for government workers.
Wages are not lawfully taxable. Only “income” is taxable which is profits from investments.
Learn the law or suffer consequences.
Also, we need to take over the private Federal Reserve bank and incorporate it into the US Treasury, and instantly the debts to those crooks disappears since we would then owe the debt to ourselves.
Learn how all this happened through legal vs Lawful proceedings and corruption and fraud.
All backed by court cases and precedent, learn or suffer.

Reply
Fred Munoz

“Many of the opposition [to the new Federal Constitution] wish to
take from Congress the power of internal taxation. Calculation
has convinced me that this would be very mischievous.” –Thomas
Jefferson to William Carmichael, 1788.

“The rich alone use imported articles, and on these alone the
whole taxes of the General Government are levied… Our revenues
liberated by the discharge of the public debt, and its surplus
applied to canals, roads, schools, etc., the farmer will see
his government supported, his children educated, and the face of
his country made a paradise by the contributions of the rich
alone, without his being called on to spend a cent from his
earnings.” –Thomas Jefferson to Thaddeus Kosciusko, 1811

Reply
1. Mark Biernat
  
  Thank you for these quotes. Jefferson was not talking about the income tax of the modern world which has transformed us from a free market economy to a mixed socialist-free economy. Jefferson was was talking about a Adam Smith idea of providing a limited government that provided and opportunity for all. Not the massive government, the biggest employer in the US we have today and no mention of an income tax.
  
  Reply
Tae

I would suggest everyone learn the law. That is what is needed most in this country. The income tax is not a direct tax, which is the reason the Supreme Court has ruled it constitutional. The sixteenth amendment changed nothing. It is an indirect tax, an excise, based on the performance of certain privileged activities, the income from those activities being the measuring tool.

Wages are lawfully taxable, however you need to know exactly what wages are. Just because the person you work for labels your earnings as wages, does not change what they inherently are. And most Americans don’t earn wages. You can find this by scoping the specialized definitions within Title 26.

Income is taxable. The question is, is what you earn income?

Most people don’t want to spend the time to actually sit down and learn this stuff. Freedom is not free. If you don’t know what you’re dealing with, how will you ever change anything?

SS#’s have nothing to do with whether you are liable for the income tax.

Check out losthorizons.com. Excellent information and plenty of proof right there on the site.

Reply
EDWARD GUCKER

Taxation is only part of the picture, and it needs the contrast of other thoughts the founders had. Jefferson, Madison, and both John & Samuel Adams had deep concerns about corporate power and the concentration of wealth. In fact, they thought that if the republic was going to fail, these very things would be the cause. The notes about debt are certainly true, but rather than enact taxes to pay it down, we cut them and we go ever deeper. At the end of Clinton’s term, the surpluses should have been used to pay debt, but the politicians overlooked the debt and decided that government had too much money. This has been our biggest mistake.

Reply
1. Mark Biernat
  
  Washington in his farewell address warned of debt also and it should be paid down. The only thing that could stop our debt from getting to the point where we can not make interest payments is a balanced budget amendment.
  
  Reply
Raspyootn

Thomas Jefferson on taxation. “to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.”

Reply
1. Mark Biernat
  
  Are you talking 1% tax on the rich and .05% tax for the poor or none, or are we talking about the socialism we have today where if you are honest and aggregate all taxes and fee some local, state, federal, coupled with the US debt which is a deferred tax, and is a reasonable portion of productive capital diverted to a less productive sector, the government.
  There is an argument that income stratification comes from poor monetary policy, and fiat money. Perhaps looking at monetary reform would be more fruitful than simply increase taxes and give the government the licenses to spend more.
  
  Reply
  1. Yup
    
    Don’t forget the historical context either: a quasi-pre-industrial society where slavery was legal.
    
    Reply
    1. Mark Biernat
      
      Slavery is and was a sin.
      
      Reply
we2hobbits

FairTax.org The Fair Tax is the best answer.

Reply
1. Mark Biernat
  
  I would have to analyses this tax idea. It has the advantage of simplicity. However, just because it has the word ‘fair’ in the title does not mean it is ‘optimal’. It might be a positive over the current structure of our tax system. However, some people say a negative income tax is more efficient or a universal basic income and a simplified tax code. I think the issue is not the tax structure per say, rather the total expenditures spend on wasteful government endeavors. For example, people confuse national defense with the military budget. Two different ideas.
  
  Reply
Donald A Ax

Yes, that’s what it is. Or since we live in a global economy, corporations find it difficult to compete with companies that reside in countries with little environmental laws and low wages, among other things. Why do you think companies move out and take jobs with them? Perhaps it’s because of a 35% corp rate, high wages and environmental regulations. Lowering corporation taxes and reducing regulations means more jobs. The only way around it is making other countries as expensive and difficult to do business as here. Good luck with that.

Reply
1. Mark Biernat
  
  If you aggregated all taxes, fees, tolls, sales tax, social security, medicare, property, local, state, federal, not to mention the debt which is a tax deferred to the future, I think you would find a large crowding out effect of entrepreneurial effort. Before 1913 the US grew rich with a low tax environment as do other countries today as evidenced by the freedom index for example.
  
  Reply
Rahul Agarwal

What you don’t seem to realize is that Jefferson understood from very early on the dangers of an overly commercial society and capitalism. He feared the ills that industrial capitalism would bring, and knew how the federal government would become a tool for extracting wealth for the big businesses of his day. The Hamiltonians who were the conservatives expanded the roles of the government to carry out the wishes of the shipping industry in the north and the wealthy owners of the infant industries. What you fail to understand is that it was your party (Federalist party- the forerunner to the Republican party) that was a proponent of big government to favor the wealthy and men of substance. Your party stole away the liberties of the common man and gave those away to the industrial and banking interests of the north. Once the common man became enslaved to the urban industrial setup, the only interests served in Washington, were those related to corporate welfare. The enslaved US populace that comprises middle class and lower class individuals, has no capital of its own to work upon, and so remains dependent on the government for crumbs as a form of life support. Jefferson, on the other hand dreamed or atleast wished for a utopia where every man could own some capital of his own engage in self directed work, and not be “working for hire”. Where everybody would be a capitalist. Almost everybody. Self employment which, in America from the last century till today has remained only a dream for most.

Thomas Jefferson to DuPont de Nemours [Apr. 15, 1811]- “the poor man in this country . . . pays not a farthing of tax to the general government. . . . Our revenues once liberated by the discharge of the public debt, and its surplus applied to canals, roads, schools, etc., and the farmer will see government supported, his children educated, and the face of his country made a paradise by the contributions of the rich alone”

Reply