The Articles of Confederation and the Constitution each had their own impacts on the United States economy. It can be shown that the drafting of the Constitution reversed the control of economic authority between the national government and the states, specifically regarding the laying and levying of taxes. The stipulations of taxation are clarified in the Articles and the Constitution through Article VIII and Article I, Section 8, respectively. Both statements provide for an easy analysis of taxation considering the means of taxation and how it is assessed, who collects the taxes, and the purpose of these duties.
An additional observation can be made regarding the effects of slavery on the Constitution and how that is reflective of the economic impacts of the document. With the comparison of these aspects, a conclusion can be made about the reasoning behind the change of this provision in the Articles.
The American Revolution resulted in a substantial amount of debt for the United States. To finance the War of Independence, Congress had borrowed large sums of money by selling interest-bearing bonds and paying soldiers and suppliers in notes to be redeemed in the future (Foner, 200).
The Continental Congress owed $42 million at the end of the revolution (Lecture #9). The states lacked a secure source of revenue, so they had to address taxation in their first written constitution, The Articles of Confederation. They used this constitution as an initial attempt to apportion taxes to the states.
The Articles of Confederation primarily addresses taxation in its eighth article.
According to this article, the government is levying taxes to each state as a whole, based on the value of each state. The taxes collected will be used to fund a single account to pay the charges of war. This is clarified in the document when Article VIII states that the â€œcommon treasury which shall be supplied by the several States in proportion to the value of all land within each state.â€ Furthermore, the document states that any additional improvements of buildings and land will be taken into account for the estimation of the value of the respective state. This stipulation allows the assembly of Congress to increase taxes with any proportional increase in the value of the land within a state.
The next paragraph of the article refers to who will be laying and collecting these taxes. It declares that the dues will be â€œlaid and levied by the authority and direction of the legislatures of the several States.â€ The main notion to be extracted from the Articles of Confederation is the fact that Congress did not possess the power to levy taxes or regulate commerce by any means. The states retained the ability to adopt their own economic policies. Utilizing this power, several states printed sums of money in order for individuals to pay their debts (Foner, 200). In summation, Article VIII of the Articles of Confederation left Congress with very little financial power as well as a lack of a dependable source of revenue.
Due to the need for better regulation of interstate commerce, a group of fifty-five delegates congregated to form the Constitutional Convention, with the objective of drafting an entirely new constitution. The Constitution completely reversed the distribution of authority, transferring numerous economic powers from the states to Congress. This is verified in the first clause of Article I, Section 8 of the document in which it affirms that Congress has the power â€œto lay and collect taxes, duties, imposts, and excises.â€ Unlike the Articles of Confederation, which imposed taxes based on the value of each state, the first clause of the Constitution announced a uniform collection of duties, imposts, and excises throughout the United States.
From this clause, it can be understood that these taxes will now be collected by Congress, in contrast to state legislatures. However, the purpose of the taxation remains consistent with the first constitution, as they both use the money to pay debts, provide for the common defense, and promote the general welfare of the United States. Additional clauses empowered Congress to regulate interstate and international commerce, as well as borrow and coin money. The Constitution also included conditions that barred the states from issuing paper money, levying taxes, and interfering with commerce (Foner, 205). As stated, these provisions stripped the states of the power they retained under the Articles, and bestowed them onto Congress.
Moreover, an emphasis can be placed on the issue of slavery, as it had a significant impact on the economy as well. Slavery was not notably recognized in the Articles of Confederation, but was implicitly addressed in the Constitution. One prominent acknowledgement of slavery with respect to the economy was the Three-Fifths Compromise. This proclaims that taxes shall be apportioned to States based on the sum of â€œfree Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.â€ By counting slaves as property as well as three fifths of a person toward the census, people with more slaves owed more taxes (Lecture #9). Congress also found a source of revenue by allowing importation of slaves, yet taxing those that are taking them in. This is indicated in the Non-Importation Clause, which states that â€œa Tax or Duty may be imposed on such Importation, not exceeding ten dollars for each Person (Article I, Section 9). When writing the Constitution, the national government clearly found ways to generate revenue from slavery.
In addition, slavery had a large influence on the Constitutionâ€™s impact on the United States economy. Article VIII of the Articles of Confederation may have been drastically altered into Article I, Section 8 of the Constitution for a number of reasons. The transfer of power from the state legislatures to the national government that resulted from this provision change can be proven to be a purely economic decision. Due to the overwhelming debt from the war, Congress needed a more controllable, secure source of income. Consequently, the delegates at the Constitutional Convention drafted this section to put control back into the national governmentâ€™s hands. With the Articles of Confederation, the states were separate, but equally powerful entities. One can perceive that the national government did not believe the states would be able to succeed with this system in place. The Constitution generated a more unified and collective assembly to work toward common goals.
This was made possible by reassigning the economic sovereignty to the national government. In conclusion, the drafting of the Constitution can be simplified to a transfer of economic power to the national government used to generate secure sources of revenue to get out of debt. The Articles of Confederation was merely too passive and vague to create a dependable taxation plan. The Constitution administered a well-defined formulation to allow an easier way for the national government to collect income. Giving Congress a substantially greater extent of economic dominance and the states more limitations, the national government was able to utilize a widespread amount of resources to implement taxation. Clearly, the change of Article VIII to Article I, Section 8 spawned an absolute change of power from the states to the national government.