My Turn: What would the founders think about income tax constitutional amendment?
On Nov. 6 New Hampshire voters will be asked to vote for or against a proposed constitutional amendment that would prohibit the Legislature from enacting an income tax in the future.
What would the founding fathers of New Hampshire think of such a constitutional ban? Based on what they did in the late 1700s, I am sure they would be strongly opposed.
In the early 1770s, the province of New Hampshire operated under the laws of Great Britain and the supreme authority of King George as represented by the royal governor, John Wentworth. As the War for Independence waged in 1775, Wentworth departed from Portsmouth, leaving the province without an effective government.
In December 1775, New Hampshire’s provincial congress began drafting a constitution that was completed and took effect on Jan. 5, 1776. This was the first constitution of a free state in America.
On July 2, 1776, six months after this first constitution took effect and only two days before the signing of the Declaration of Independence in Philadelphia, the New Hampshire Legislature passed its first tax law. The preamble of the 1776 law begins, “Whereas it is necessary there should be an equitable Rule established by Law for making Rates and Taxes, within this Colony, so that every person may be compelled to pay in proportion to his Income.”
Hmmmm. Read that again, please.
In an agricultural society where most income was generated by farming, the task of administration was complicated. Agricultural income was to be measured based on agricultural income produced by the land. Land used for orchards was given a different value than land used for pasture, for example. The law assigned great importance to the actual productivity of each parcel of land. Orchards, for example, were to be assigned the value of “one shilling and six pence per Acre” but the law specified that one acre was to be defined, not as a physical measure of the land but “accounting so much for an Acre as will produce Ten barrells of Cyder or Perry.” Similarly, “mowing Land” was to be valued at “one shilling per Acre, accounting so much land for one acre as will produce one Year with another one Tun of hay.” The law also included standardized values for arable land and pasture land for tax valuation purposes. The law did not tax unimproved or forest land or homes. The tax was not on the value of property, but on the agricultural income that such property might produce.
An important part of this law prohibited any other local tax base with one exception: “Reserving to every Town or Parish in this Colony the Liberty at their annual Meetings to Rate all Houses, Warehouses, and other Buildings at discretion, so that they are not estimated at more than the Twelfth part of their neat yearly Income.”
This provided to each town the option to include buildings in its local tax base, but only in proportion to the income each produced. A blacksmith’s shop, for example, was to be taxed not on the market value of the property but on the amount of net income it produced. And the blacksmith’s home was not taxed at all.
In 1784 New Hampshire voters replaced the original constitution of 1776 with the current constitution. On June 12, 1784, only ten days after the new state constitution took effect, the Legislature repealed the 1776 law defining the tax base and enacted a the first tax law under the new constitution. The rewritten law, however, had few changes. Only one change was made in the preamble defining the purpose of the law: the word “State” was substituted for the word “Colony” so that it read, “Whereas it is necessary that there should be an equitable rule established by law for making Rates and Taxes, within this State, so that every person may be compelled to pay in proportion to his Income.”
In essence, the 1784 law was a reaffirmation by the first General Court under the new constitution of the principles and specifics of the tax law of 1776.
What would the men who created our constitution and our first tax law as an independent state think of the proposed amendment to their constitution? Not much. They were champions of taxing people based on their income.
(Douglas Hall lives in Chichester.)