A central purpose of the Constitution was to enable the national government to levy its own taxes, so that it could end
its dependence on state contributions and achieve financial credibility. The very first power given to Congress in Article
1, Section 8, is the power to tax: "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to
pay the Debts and provide for the common Defence and general Welfare."
The financial credit of the United States and the interests of Revolutionary War bondholders were guaranteed by Article
VI in the Constitution, which specifically declared that the new government would be obligated to pay the debts of the old
government. The nation's first secretary of the treasury, Alexander Hamilton, made repayment of the national debt the first
priority of the Washington Administration.
The original Constitution placed most of the tax burden on consumers in the form of tariffs on goods imported into the
United States. For more than a century, these tariffs provided the national government with its principal source of revenue.
Tariffs were generally favored by American manufacturers, who wished to raise the price paid for foreign goods to make their
home-produced goods more competitive. No taxes were permitted on exports, a protection for southern planters, who exported
most of their tobacco and cotton. Direct taxes on individuals were prohibited (Article 1, Section 2) except in proportion
to population. This provision prevented the national government from levying direct taxes in proportion to income until the
Sixteenth Amendment was ratified in 1913.
The new Constituiton gave Congress the power to "regulate Commerce with foreign Nations, and among the several States"
(Article 1, Section 8), and it prohibited the states from imposing tariffs on goods shipped across state lines (Article 1,
Section 10).
