April 3, 2025 - 12:25pm
“Taxation without representation is tyranny,” bellowed James Otis in the days and weeks and years leading up to the American Revolution. This became the rallying cry of American patriots: no taxation without representation. The American patriots thought that a distant parliament in England where they had no representation had no right to tax them.
This was the rallying cry: no taxation without representation. Our Founding Fathers believed so strongly in this that they embodied it in our Constitution. Our Constitution doesn’t allow any one man or woman to raise taxes. It must be the body of Congress. Now this wasn’t new. This was part of a 1,000-year tradition, from Magna Carta on. In Magna Carta, it is stated: no taxation without the common council of the realm. Even at that time, they were chafing at one man, the king, determining the taxes for the land.
One hundred years before our Revolutionary War, in the English Civil War, there was a debate over parliamentary supremacy versus supremacy of the king. They did not want to pay taxes that weren’t approved by the parliament. In 1683 the New York charter on liberties — the beginning charter for the colony of New York — stated no taxation without representation. After the English Civil War, the English Bill of Rights embodied this: no taxation without the consent of Parliament.
This principle was long-standing and non-negotiable. This was what sparked the revolution, and yet today we are here before the Senate because one person in our country wishes to raise taxes. Well, this is contrary to everything our country was founded upon. One person is not allowed to raise taxes. The Constitution forbids it. The Constitution was so concerned with the power of taxes, because the power of taxes is the power to destroy. But our Founding Fathers were so concerned with this that they said: “No, the President will not have the power to legislate. The President will not have the power to tax — only Congress will be able to tax the people.” And only by originating tax bills in the House. It was that specific.
They were so mortified and so worried by having a monarchy, and so worried about having all the power gravitate to the executive, that they said: we must split the powers. They based a lot of their thinking on Montesquieu. Montesquieu wrote in the 1740s — 40-50 years before our Constitution — that when the legislative and executive powers are united in one, there can be no liberty.
This is something that our Founding Fathers took to heart. They said: “we must separate the powers. We must, at all cost, limit the power of the presidency.”
This isn’t about political parties. I voted for and supported President Trump, but I don’t support the rule of one person. The President is set to have a 25% tax on goods coming from Canada and Mexico. This is a tax, plain and simple, on the American people. But one person can’t do that. Our Founding Fathers said: “No, that would be illegal for one person to raise taxes.”
It has to come to Congress. It has to originate in the House. This has gone on for 200-odd years. You can’t simply declare an emergency and say: “Well, the Constitution of the Republic was great; but gosh, we’ve got an emergency or times are dire.” The Supreme Court has repeatedly said there are no exemptions for emergencies. There was no exemption for a pandemic.
The taxation clause stands. It’s an important part of the Constitution. Taxes must originate in the House. They must be voted on in Congress. No one man can raise taxes on the people.
This is an edited excerpt from Rand Paul’s speech to the US Senate on Wednesday 2 April.
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SubscribeI find that the selected published excerpt is missing the key section of Senator Paul’s speech. I did my best to transcribe without editing.
Ref: “50 U.S. Code Chapter 35 – INTERNATIONAL EMERGENCY ECONOMIC POWERS
Review of the nondelegation doctrine
I don’t recall such arguments being made when the Biden administration increases tariffs on China in 2024
To me, the core is the Congress finding a clever method of maintaining individual, though not group, popularity by shuffling by statute its responsibilities onto the Executive. Decrying on the sideline offends fewer interest groups and allows more partisan posturing without any need to make the hard decisions of actual governing.
You might be right, Senator Paul. However, Congress has become cowardly and passed its appropriation authority to unelected bureaucrats and every Federal Agency. Where does the money come from when a President/Cabinet member/bureaucrat gives money to organizations and promulgates regulations that Congress didn’t authorize? You, sir, have raised the taxes on Americans by shirking your duty. Man up or shut up.
The President is the representative in the matter of foreign relations. There’s a reason the words Tariff and Tax are different – that’s to make the distinction.
Yes there was an exemption actually. There was a huge amount of public spending and quantitative easing (QE). How are people taxed for that? Inflationary pressure. After 2008 it also happened. People are no longer able to buy assets like a house. And then you have high rents, high interest rates and ‘normal’ (CPI) inflation. All these things can be seen as indirect taxes. This confusion is often used to facilitate welfare for big capital, while they pretend to operate in a free market.
In the end central banks, commercial banks and arguably the government themselves, can create fiat- and credit- money. So, technically, they don’t need taxes, it is a mechanism. Taxes, lending, public spending, setting interest rates: all these things are simply ways to manipulate who gets what. Sometimes for technical reasons; in an attempt to manage the economy as a complex system. Very often also for political reasons under the less for thee and more for me model.
The government has increased spending and paid for it with IOU’s. This requires more taxes.
So which comes first, the tax or the spend?
And yes, they are a long ways from Kansas.
If the Supreme Court is asked to rule, and if the court rules that President Trump’s tariffs are unconstitutional, he is either gravely weakened, or attempts to become more dictatorial. We live in interesting times.
Could someone kindly explain why the Senate is getting worked up about tariffs on Canada but not on Mexico or, indeed, the rest of the world?
The vote on the Canadian tariffs was just a protest vote for show. They seem to have chosen Canada because it’s the most sympathetic case. The bill would never pass the House, or the Senate if normal rules requiring 60 votes were followed. And even if both houses of Congress passed the bill, Donald Trump would veto it.
This guy always disappoints. He’s full of hot air, not least for failing to snare Fauci. Plus his education doesn’t seem to have included a course in protectionism.
Tariffs Aren’t Taxes — And Rand Paul Is Oversimplifying the Constitution
Senator Rand Paul is either mistaken on purpose or choosing to overlook important historical and economic context in his article for ideological reasons. While he invokes the Constitution to argue that no single person can raise taxes, he blurs a critical line: a tariff is not a tax, even if it has same financial consequences.
Historically, the Constitution did link population counts to both representation and taxation. But that framework was built on a political compromise—most clearly seen in the 3/5 Compromise. Southern states with large enslaved populations didn’t want to pay more in federal taxes, so they negotiated for enslaved people to count as three-fifths of a person—not to recognize their humanity, but to increase representation while minimizing taxation.
That system, however, is long gone to a point. The 14th Amendment ended it. Today, taxation is based on income, property, and consumption—not population. The way taxes function now has evolved dramatically, and it’s misleading to treat the original constitutional language as if it still governs modern tax mechanisms.
Paul also fails to acknowledge that the President does not raise taxes in the constitutional sense when imposing tariffs. A tariff is a price control mechanism—a tool of international trade policy. It raises the cost of imported goods, yes, but it is not a tax levied on individual citizens’ income or property. It is a strategic gatekeeping measure—a way of saying: if you want to sell in our market, you’ll pay to enter. That’s more akin to rent or a toll than a tax. China said when US was entering its market, you bring ideas of innovation and our people build it…big mistake made by US! that should have been a clue of to come! but short-slightness does that!
Tariffs aren’t about funding government programs. They’re about reshaping trade terms—sometimes poorly, sometimes with intended purpose. But they are not forbidden by the Constitution, and lumping them together with taxation confuses governance with economic negotiation.
Paul’s libertarian view clings to an ideal of a free market that no longer exists. In a world of bailouts, quantitative easing, and manipulated interest rates, no major economy functions as a true free market anymore—and America is no exception. Your rule, Senator, is: “Do not do as I do, but I will do as I wish.” Why do you assume everyone will bend the knee and say “OK,” as if the U.S. is a monarchy? Do you see the irony in your argument? The so-called free market you defend operates by power and decree—just like the King of Britain. But now, there are new sheriffs in town who aren’t following that rule. They’re demanding a more principled framework for a multipolar world. So Trump must balance that new world versus internal word play political debates without any merits.
So when Rand Paul cries foul over tariffs as unconstitutional taxation, he isn’t defending the Founding Fathers. He’s defending a myth of market purity that no longer holds up. The real issue isn’t whether tariffs are constitutional. It’s whether America is ready to face the fact that its economic strength now rests largely on what little it still produces—and what the world is still willing to buy.
That’s the conversation we should be having—not political theater over a word.
PS: maybe US population will wake up and STOP buying garbage in and out to distract themselves from knowing their country = corporation!
The Constitution gives Congress the power to impose both taxes and tariffs. The president doesn’t have that power, except to the extent Congress gives it to him. That’s Rand Paul’s point.
The technical constitution questions are (1) Are the tariffs within the parameters already authorised by Congress? (2) Did Congress delegate to the executive the power to vary the rates from different countries? (3) How much power of variation can Congress delegate before it amounts to an effective rewrite of the constitution?
Regarding the delegation of discretion, arguably the courts have allowed unconstitutional delegation of powers from Congress to the executive in many areas already (eg. EPA and IRS rule making), which is why the bureaucratic state has become such a monstrous law unto itself. This is something that needs to be rolled back.
Amen. If the courts don’t step in now, with this blatant power grab, they never will. We will have a president who is a king.
The US have been taken over by the Confederates and a disregard for the constitution by them should be expected. With a politicised judiciary, with half the country not having much trust in the judicial system and with the political system much compromised by AIPAC money, it is high time to consider partitioning the country along Mason-Dixon line.
What about sorting out Muslim shitholes first, instead of partitioning USA?
You keep posting on here using USA technology.
Globalisation has been a disaster. It has been exploited by Western politicians from Obama to Cameron as a guise for transferring wealth from the developed nations (especially USA) to the ‘developing’ nations of the 3rd World, and has entiched mega-capitalist socialists along the way. USAID wasan egregious offshoot of this cynical politics.
If anyone has driven through the American rust-belt as I have, you will appreciate the huge damage that has been done to such communities. Trump is absolutely right to put USA first and to seek the return of manufacturing and wealth to his nation, and to retain it.
And shouldn’t we all be very glad indeed now that the UK sorted Brexit? Thank God we are mostly (ECHR, etc. excepted) free of the EU shackles and socialist madness.
Uk, sorted Brexit?
I love your optimism, but reality is different.
TTK is dragging as slowly back into Europe.
While ECHR is major obstacle, it was government of Boris Johnson which flooded this country with low IQ, violent savages from Muslim countries and Africa.
I voted for Brexit, but if I knew that Europeans who would integrate within generation are to be replaced by moronic benefit scroungers I would not.
“free of the EU shackles”?
The UK is no more free than a released long term prisoner who won’t open a door until someone gives him permission to do so. Ostensibly he is free but doesn’t have the will, or skill, to use it.
As A J P Taylor so correctly said, joining the EEC wasn’t a policy, it was the absence of policy.
Unfortunately the UK no longer has any leaders with the character to formulate, and carry out, policies which will benefit the UK and its peoples.
We just have to “hold our noses” and wait patiently.
Good point. Implementation of Brexit has been utterly pathetic.
Nice speech. Now let’s see legislation introduced by Senator Paul revoking Trump’s tariffs.
Well made points but US Presidents have imposed tariffs before without, as far as I know, generating a constitutional crisis.
No US president has ever imposed tariffs like this. Not even close. Thus, the constitutional crisis. When you raise the temperature of water a frog is swimming in, at some point the frog will jump out or die. We’re at that point. The water is hot enough to kill us unless we jump, now.
It’s business. The CEO has decided on a daring strategy. If the strategy succeeds and the US rust belt experiences a return to some kind of prosperity then the CEO will be a hero. If not, he’ll be toast. That’s how it should be – as distinct from the European and UK version where no amount of failure is punished.
You present very narrow view of business.
Listed Business has shareholders and board, so CEO can not just decide policy on his own.
While Trump might think that all these tarrifs on allies are great idea what about impact on USA exports?
Would you buy Boeing airplanes?
What about weapons exports?
Would you trust USA to obide by any treaties and trade agreements?
I preferred Trump to Harris, but his policies might backfire badly on USA long term.
A CEO can be removed by the board of directors at any time for any or no reason. A president cannot be, and the next election is four years away. Donald Trump is out of control, and Congress and the courts are not reining him in.
If we had a parliamentary system, where the president was a prime minister of sorts who could be toppled at any time by a majority vote of Congress, that would be different. We don’t.
The people need to rise up. Rand Paul is right. We have a president, not a king. Donald Trump’s reign as king, with Elon Musk as his unelected and unconfirmed co-king, needs to end. Now.
When the building is built on fire a sense of urgency may look like being out of control.
Urgency is not the problem. Evading constitutional checks on presidential power is. When people tried to rein him in Donald Trump spat out the bit and is running free. That is not a good thing.
Do you think the founding fathers thought it was possible to spend your great grandchildren’s labour?
I have to disagree.
Let’s first separate the end from the means here. It shouldn’t matter whether we’re on “team Trump” when judging this. I’m not a lawyer, but this doesn’t feel right.
The key point – which Rand Paul argues well for me – is whether Trump is exceeding his constitutional powers (whether by the letter or the law or in spirit). We’ve seen many cases – dating from around the Blair era if I remember correctly – of UK cabinets making policy through methods which bypass Parliament (something like orders in council ? I forget the terminology). This feels rather similar to what Trump is up to – that is stretching methods beyond their intended use to bypass proper debate and scrutiny and avoid the “due process” the constitution expected and intended.
So this trend – in both the US and UK – to increasing executive power at the expense of parliaments by “creative legislation” isn’t one I support. Even if it produces better results (far from certain in the Trump tariffs case, but beside my point).
Someome else used a business analogy about firing the CEO. It’s worth remembering here that Trump was only ever the CEO of his own private company – never a public company where he was directly accountable to shareholders. Just saying !
The US is going to have to get used to much higher prices or much less choice with these tariffs.The challenge with onshoring all production is that US workers earn approximately $65,000-$75,000 annually, while Vietnamese workers earn around $3,000-$12,500 annually. Lets wait and see what happens once reality kicks in at the grass roots level.
I think a lot of people are aware of the reality and do understand the situation. Certainly not all of them. Probably not the white collar college educated workers who have never had to work in a factory or in construction or ply a trade. The working people who have seen the factories close and the jobs go elsewhere do understand. They saw closing factories and rising inequality and asked “why is this happening?” and they discovered it was because multinational corporations were sending jobs to China and other places because of cheap labor and limited regulation, sometimes as a result of deliberate government intervention in monetary and trade policy to take advantage of the situation.
Is it fair for a Vietnamese worker getting paid a fractional amount of what an American would earn? Isn’t there a reason we have minimum wage laws and laws protecting labor unions? Didn’t our ancestors a few generations back fight very hard for the rights of workers that modern Americans enjoy? Is it OK for Vietnamese people to toil in conditions that would be expressly illegal in this country? Is it OK for companies to release toxins into their environment that they couldn’t here? Is it OK for the corporations and tycoons who had to be browbeat into submission by the government and by the workers to simply replicate their previous exploitative policies elsewhere? Is it fair for governments to use export models and manipulate currencies to attract corporate investment to build up their own manufacturing sector for purposes of geopolitical strategy? Is it fair for those same governments of those same nations to control access to their internal markets through high tariffs or by direct intervention? By allowing unfettered free trade, we are essentially saying that yes, all this is fine. Well, I don’t think it’s fine and a lot of Americans don’t think it’s fine. They voted for change.
I’m aware there will be consequences. There were consequences for the policy of the past three decades as well, largely ignored by the affluent urban professionals in the other party. Choices have consequences, and their choice to basically tell middle America and the working class that ‘this is how things are now and just deal with it’, is having the predictable consequence of class warfare of a type not seen since FDR. If Trump fails, they won’t stop being angry or support globalism as it existed in 2015, they’ll seek out more radical solutions. For one reason or the other, things are going to get worse before they get better. How much worse depends on the quality of our leadership, and given that we have a TV personality as President because he showed some awareness of the political mood than basically the entire political establishment across both parties, I’m not optimistic.
You raise important points. The reason Americans are gaining more while the Vietnamese and others receive less has everything to do with the policies set by global financial powerhouses—primarily in the U.S. and U.K.—and institutions like the WTO. These policies established a hierarchy: labor in the West is worth more than labor abroad. And the world followed that logic which is backfiring now!
A shift occurred. Workers earning $3,000 to $12,000 a year in manufacturing economies have become smarter and more capable—they’re the ones actually making things. Meanwhile, America’s elite remain stuck in a cycle of performative intellect—selling ideas without producing material goods. It’s not just economic imbalance; it’s real embarrassment.
I’m more optimistic than you though. Yes, there will be pain, but it will force a reset. America won’t get back everything it outsourced, but it will start making what it needs rather than what it wants—and that’s a major shift. The age of producing cheap goods for endless consumption is coming to an end.
America’s true export has never been cheap labor or manufacturing—it’s cultural influence. The world still looks to America for culture, not to China. That’s America’s real commodity, and once it starts producing based on needs, not wants, the whole global dynamic will change in very unprecedented ways!
Trump, perhaps unintentionally, is leading us toward the death of profit as the ultimate goal for US. If people buy what they need rather than what they want, profit margins shrink—but innovation grows. Real ideas return. People start thinking again. Not just consuming. Innovation is not equal to profits – this is propaganda propagated by the ruling class! Innovation is from having less stress!
China’s model shows this already: low inflation, high saving, controlled profit. America doesn’t need to become China—it just needs to stop mindless spending. That alone could transform everything.
Perhaps there is a fear to having 350M wake up from exploitation with nothing to show but it is better to have strategic awakening than a violent revolution!
No offense. I get where you’re coming from, but this is just the reverse logic of neoliberal globalization and that’s also been tried with even less success. From each according to his ability and to each according to his needs didn’t work for the Soviets and still won’t. You say you don’t want to imitate China but then you call for Americans to be more like the Chinese, but the reason the Chinese aren’t like the USA is because it’s a totalitarian society.
People aren’t that nice. Some will try to profit at the expense of others. Always has been so and always will be. Dream all you want but stay far from political decision making. The death of profits sounds like something out of mid 60s socialist propaganda.
The thing is. There’s no solution here. It’s just people competing for scarce resources individually within society and competing externally with other societies. It’s the same version of politics and human civilization that has existed since ever, and there is no magic that will change it. American workers had to fight and struggle and suffer for better wages in earlier generations because of elite exploitation and they’re having to fight globalism now for the same reason and they may have to endure some hardship to do ti, because human nature doesn’t change and people exploit one another if they can.
They must be prevented from excessive exploitation through law that reflects the values and culture of whatever nation is in question. People must be free to express their will and hold their leaders accountable through elections, protests, and in court. Its not perfect and never will be, but it’s the closest to utopia humanity will ever get.
Thank you for your response, but I think you misunderstood my point—or maybe I didn’t explain it clearly enough.
I’m not saying there’s no profit in America ever. I’m not saying people don’t take advantage of others, or that profit itself disappears or that it is even unnatural. That’s not the issue.
The problem is the belief of profit above all. Americans believe the market is free—both in their minds and in their actions. But the market is not free. Not even close.
Every time the market crashes, the government steps in and pumps it back to life. That’s not a free market—that’s a controlled collapse, followed by state intervention. It’s socialism for the elite, capitalism for the rest. BTW, China, Russia and many other countries do the same but they do not go delusional and insist the market is free – they are like market is free until it crashes and we save it and while we do that – all those who profiteers must build highways, and trains, and houses (because the injection money is tax payer’s money). This is not the case in US! wild!
Countries like China and Russia figured this out a long time ago—because they had no choice. They went through revolutions in the last century. They tried everything: communism, socialism, dictatorship, totalitarianism, democracy (if you define it as voting). They experimented. They failed. They learned.
America hasn’t. It’s still clinging to the myth of the “free market” like a religion. But here’s the irony: China now has more practical market freedom than the U.S.
Why? Because if you have an idea in China, you can go to a factory and get it made the next day. In India too. You can innovate and produce—immediately.
In America? You need a lawyer. You need patents. You need to fight off tech giants like Google or Facebook before your technological idea can breathe. Innovation is caged in red tape and legal warfare.
So tell me—who really has a free market? Who’s free to build? And they are surpassing us now…why?
What America calls a “free market” is nothing but ideology. It’s not a principle. It’s not practice. It’s a story people tell themselves. Meanwhile, in China and India, creation is still possible. In America, it’s almost impossible.
That’s what I mean by the death of profit as we know it.
When America wakes up to the fact that no one else is playing by its rules—because those rules were never sustainable to begin with—it will have to adapt. It will have to become more like the places it used to ridicule like you are doing it here. Places where people like you and I can invent something and see it built tomorrow.
America’s problem is structural. Legalism reigns. The economy is run by lawyers—not builders, not doers, not creators. Elsewhere in the world, it’s engineers and entrepreneurs who lead. Financialization is failing!
So yes, we can talk about profit. But if we’re honest, the American system is failing the very ideology it was built on.
Why?
Because it was built on sand. It assumed—like all imperial models—that no one would figure it out. But people are figuring it out. The illusion is breaking.
And as for Trump and on topic? He’s not creating chaos. He’s revealing it. He’s exposing the system, whether by design or by accident. He’s pressing the reset button.
How this ends?
That’s anyone’s game.
Very good points. Competition does not nurture innovation, it stifles it. Cooperation between specialist companies that produce interoperable products is the key to getting new products to the market.
A good example of this is in China making electric cars. Ford CEO Jim Farley had a new Chinese car from Xiaomi airlifted from Shanghai to Chicago last year and he test drove it for six months. It was a luxury sedan with the latest in “user experience” (Xiaomi is a smartphone company) and it does 0 to 60 in 2.9 seconds, has close to a 500 mile range, and costs $30,000. In less than 3 years Xiaomi was able to take the car from an idea to 100,000 units.
Jim Farley loved the car. He said that his company’s competition is no longer VW or Toyota. It’s the Chinese. Their supply chain and contract manufacturing lets them get new technology onto the market rapidly at a low price in a way that no other carmakers can match.
Great post.
That is what happened when communism collapsed.
Rich in the West realised that they can do what they want.
There is longer danger of revolution and them hanging from the lamposts or toiling in gulags.
So West great democratic leaders had no problem with impoverishing lower orders by moving jobs to China or Vietnam.
Pseudo communist dictatorships when there are no unions or human rights.
They did it with cooperation of far left by throwing them the bone of multiculti, open borders, gender and green nonsense.
Yes, nothing wrong with any of that analysis.
You make some good arguments, and your pessimism may be justified, but I think you are missing an important point here. Ever since Donald Trump took office he has been a whirlwind, always moving and getting things done. After a do-nothing president like Joe Biden, that was good to see.
But Donald Trump doesn’t know when to stop, and the people who should be setting boundaries on him aren’t. He’s deporting some people he shouldn’t. He’s given some people power who don’t deserve it. He’s imposing tariffs to enact economic policy when he wasn’t given that power.
We do have a lot of problems as a nation. But we have always had a lot of problems, and we have struggled through them. Our Constitution, with its check on power, has been one reason why. We have never given one man unchecked power as a king or technocrat.
That check on power principle is being tested now. It’s not that Donald Trump is running completely amok. He’s not totally out of control, and he’s not going to run for a third term. But he has gone well beyond acceptable boundaries, and unless he is stopped now, who knows what damage he will do.
I’ve lived and worked for 10 years in a foreign country, and I’ve worked for clients around the world. My wife is not an American citizen. I have a pretty good idea of why the United States has been a vibrant and world-leading economy. And in promoting economic growth, the right has been more right tin its thinking than the left.
So I support Donald Trump in what he is trying to do. But I don’t support the way he is doing it. We need to rein in King Donald and end his imperial reign. And then, when he is just a president instead of a king, we can get back to work on solving the country’s problems just like we have so many times in our 250-year history.
Your example is really the case against globalisation.
There is no way that USA or European workers can compete if Vietnamese worker uses the same technology.
I remember training Indian IT guys about 15 years ago.
They earned about 25-30% of equivalent uk job.
But they could efford domestic staff on these wages.
Guys on 50% uk wages had private drivers.
There reason was that 90% of Indian population was paid £3 a day, so menial labour was cheap.
Globalisation was attempt by West rulling class to get much richer at the expense of 90% of population.
Well, I guess it comes down to how you understand the concept of taxes here.
Do you interpret the founding fathers’ considerations to extend only to direct taxes, i.e. taxes (e.g. income tax, VAT, capital gains taxes) which are to be imposed on the populace by its own elected government (rather than some distant, tyrannical, English one – ahem..).
Or does the concept also extend to indirect taxes or tax-equivalent charges, i.e. the increased prices of goods from Canada, Mexico etc due to tariffs.
Mr. Paul is clearly in the second camp. It’s not that adventurous an argument, but I think you can make the first argument perfectly well too. The founding fathers likely didn’t foresee things like the hyper-globalised world we live in now or the role the US would play in it – is it right to invoke their thinking in this situation?
The income tax didn’t exist at the time, nor did most of the others. Direct taxes on individuals were expressly forbidden by the Constitution. The federal government could only really tax international trade in specific goods or tax the states in some way. At that time, taxes on trade in specific goods were the main source of revenue for the government. At around the turn of last century, world governments were transitioning from old mercantilist policies to modern economic models, and were replacing tariff revenue with direct taxes like income taxes. In 1895 the Supreme Court ruled that the Constitution’s provision forbidding direct taxes made this unconstitutional. They ultimately had to change the constitution. The 16th amendment is generally called the income tax amendment.
So, yes, Mr. Paul is technically correct. The founding fathers would clearly see tariffs as taxes. Since that time however, those other taxes have replaced the income tax as a source of government revenue to the point that tariffs are considered more a function of trade and economic policy than taxation. Further, the taxes the founders complained about during the revolution were usually paid by individuals trading the products in question or directly by consumers. The founders did not imagine the existence of multinational corporations. There is very little in the modern economy that would be familiar to them. If one could bring them here in a time machine, they would, after recovering from the shock of modernity, probably find much to criticize in American government and policy.The mere existence of the income tax, capital gains tax, and inheritance tax would probably alarm the founding fathers to a far greater extent that the President’s ability to adjust trade policy.
What’s really going on in my opinion is that around the turn of last century, economics evolved and taxes and tariffs became separate concepts. The first sentence in the second paragraph of the wikipedia article I looked up to confirm my memory about the sixteenth amendment plainly lists tariffs and taxes as two different things, and most modern economists and most people consider them separate things. A tax is something the government imposes to raise the revenue it needs to carry out its various functions. A tariff is a fee imposed on international commerce for the purpose of economic policy. Raising revenue, the whole point of taxation, doesn’t enter into the thought processes, although Trump himself seems to have enough awareness of history to understand that tariffs can be used to generate revenue. He probably greatly overstates how much revenue can be raised, but then maybe he’s right and I’m wrong. I suppose we shall see. At any rate, tariffs were handed off to the executive branch sometime in the last century because they often need to be adjusted quickly as a response to rapidly changing economic conditions and Congress doesn’t do anything quickly. Executive control of tariffs became a functional necessity when tariffs became tools of trade policy rather than tax policy.
To me this is an illustration of how natural changes in language that occur over time can obscure the meanings of words spoken centuries ago and make legally interpreting such things difficult. Mr. Paul is a shrewd politician and understands the ambiguity. Further, he’s a libertarian who really doesn’t like any taxes. I have no idea what Mr. Paul would do if confronted with a situation where the House did pass a tariff bill and he was forced to vote on it. He may not have any idea himself. He likely knows it isn’t going to happen and knows taking this public stand is an opportunity to score political points. He’s quite shrewd in that way. By focusing on the Constitutional issue, he avoids a direct confrontation with the President, one he would probably lose. He shows loyalty to the founding fathers and the Constitution, something that resonates with many voters. He also gets on the national news and in the newspapers and on the Internet. Unlike his father, who had similar libertarian principles but absolutely no sense of subtlety or political awareness, he’s very good at understanding political machinations and taking advantage of PR opportunities. He’ll be a powerful player in Washington for many years to come and it wouldn’t surprise me if he tries to run for President again.
Pretty spotless assessment. I would just add that tariffs don’t fit the ordinary definition of a “tax on representatives.” It is a tax on foreign entities with an indirect impact on representatives. A true “tax” can’t be indirect.
If we go down the road of Mr. Paul’s logic, we could ultimately argue that the Fed is in a perpetual state of taxing and withdrawing the tax when it applies and withdraws quantitative easing…IE money printing.
You’re right about Rand. I like him too but this is a performative argument.
Tariffs are a sales tax intended to biase the buyers purchase decision. They do not tax the seller who has a choice of hoping his buyers keep buying, reducing his profit margin, finding a new market or reducing production.
This is all very interesting, thank you!
But having read all of that – then I don’t understand why there should be any constitutional issue, as you’ve set out that taxes and tariffs are two separate things, with the latter being shunted off to the executive some time ago as part of trade policy rather than a source of revenue. Seen that way, Paul is wrong to say that these tariffs are taxes and for him to invoke the founding fathers’ thinking completely skips over the historical development you’ve just explained so nicely.
The founding fathers gave Congress the power to impose tariffs just like they did taxes. That’s Rand Paul’s point. The taxation clause in the Constitution includes taxes and tariffs, and treats them the same.
It’s true that Congress has given the president some power to levy tariffs, but it didn’t and couldn’t give the president a blanket power to set tariffs. That’s Congress’s job.
It’s great that Donald Trump is shaking things up. But power is too alluring and needs to be checked. He is out of control now, and needs to be reined in before he does damage.
To put a long story short, he’s scoring political points because he can. He’s basically the leader of the libertarian faction within the Republican party, a faction that is weak nationally but strong in his home state of Kentucky. This is one issue where said faction might not see eye to eye with the President. Still, he knows better than to oppose the President directly so he makes a procedural point that will resonate with a lot of his voters and keeps his name in the news. He’s playing to the cameras for influence and power nationally, which every halfway decent politician does whether or not they’re the de facto leader of a faction or not. He’s good at it, too. He’s aware of the political facts. Even strict libertarians aren’t united on this issue anymore given how far from true competitive capitalism the global economy actually is. Some would argue that tariffs are necessary because of the anti-libertarian policies of every other country, and might well support reciprocal tariffs, which is exactly what Trump is doing. Still, Mr. Paul can score points with the members of his faction that are still anti-tariff without confronting the President directly and be confident it’s highly unlikely that he’ll be voting on any tariff bills coming from the house given that he knows the relevant history as well as I do. He’s shrewd, competent, and knowledgeable and that puts him above a lot of others in my eyes regardless of policy. I don’t agree on every policy with any politician but Mr. Paul seems like he’s smarter than the average Washington insider and not afraid to use his own judgement rather than blindly follow the leadership, whoever that may be.
Your assessment is generally strong, but I disagree with your final point about Rand Paul and his father. You’re missing a key shift: during Ron Paul’s time, the internet was in its early stages. Today, in the era of social media and AI, subtlety and political double-speak are no longer effective—they’re seen as hypocrisy or evasion. The public has their fingers on fact checks!
People now expect direct, literal language. The days of sounding clever while saying nothing are over. If Rand Paul continues to speak in coded or evasive terms, no one will listen. Voters no longer respond to “I know more than you, so I’ll hide the truth from you.” That approach doesn’t work in this era. And this explains why Trump is winning, he “often” does not mince words!
I’m not sure where you are coming from. Article I, Section 8 of the U.S. Constitution vests the power to lay and collect tariffs with Congress, just the same as taxes.
Congress has authorized the president to use tariffs in certain situations, but Donald Trump has blown past the limits Congress imposed on his tariff powers just like he did with deportations. And Congress has, as Rand Paul delegated tariff powers which should not be delegated.
The president has been given too much power for one man, and Donald Trump is seizing even more power. It’s not good for him, as it eclipses the good that he does. That’s not good for the country.
The Boston Tea Party was a protest against taxes on imports (duty on tea – an indirect tax) so the US history starts with protests and rebellion about taxes, so Mr Paul is on point even if the taxes are indirect.
Tariffs are also definitely within Congress’s constitutional power, but prior laws passed by Congress empower the President to use tariffs given certain conditions under statutory authority – a specific instance is in order to equalise trade or costs of production.
In this case, the use of ‘trade balance’ calculations to set the tariff rate, and mention of ‘reciprocal tariffs’ are being used deliberately to satisfy the justification for the tariff under these type of equalisation considerations. Logically, that would also suggest that if the trade balance evens out, the President would no longer have the authority to maintain the tariff.
However, the President may be at the outer limits of what is legal with something of this scope and breadth, and it really should involve Congress as the money raising body.
10 per cent is the lowest of the Trump Tariffs, so Britain, Australia, Turkey, Egypt, Saudi Arabia and the United Arab Emirates turn out to be no more special than Trinidad and Tobago to the United States, nor Javier Milei’s Argentina and Nayib Bukele’s El Salvador any more special than that to Donald Trump.
Israel has been subjected to a striking 17 per cent. Jordan to 20 per cent. One of America’s East Asian military colonies, Japan, to 24 per cent. The other, South Korea, to 25 per cent. Taiwan, officially the front line of the free world, to 32 per cent, only two lower than China.
And the 20 per cent on the European Union covers countries supposedly as dear to American hearts as Italy and Ireland, plus Atlanticist stalwarts as staunch as Germany, Poland and the Netherlands, together with the purported Hungarian twin pole of the international movement that manifested itself as MAGA.
But the withdrawal of the United Kingdom from the European Union, including the Single Market and the Customs Union, provides a double opportunity, both to reorganise the British economy under State direction, and to begin to develop a fully independent British foreign policy, including in relation to the United States. On that basis, Britain should be entering a new pro-business age.
The pro-business tradition came down to the Attlee Government from the ultraconservative figures of Colbert and Bismarck, via the Liberals Keynes and Beveridge, and it held sway in Britain until the Callaghan Government’s turn to monetarism in December 1976.
That tradition corresponds closely but critically to the Hamiltonian American School as expanded by the American System of Henry Clay, a pro-business tradition that between the 1860s and the 1970s worked to make the United States the world’s largest economy, with the world’s highest standard of living, culminating in the glorious achievements of the New Deal, which in turn made possible the Civil Rights movement.
With a strict division between investment banking and retail banking, large amounts of central government credit, over a long term and at low if any rates of interest, would build great national projects, notably enormous expansions in infrastructure. Those would then pay for themselves many times over, ably assisted by pro-business tariffs and subsidies, and by a pro-business National Bank to promote the growth of productive enterprises rather than speculation.
A sovereign state with its own free-floating, fiat currency has as much of that currency as it chooses to issue to itself, with readily available fiscal and monetary means of controlling any inflationary effect. Those means therefore require to be under democratic political control.
For the good of business, we should implement Theresa May’s original Prime Ministerial agenda of workers’ and consumers’ representation in corporate governance, shareholders’ control over executive pay, restrictions on pay differentials within companies, an investment-based Industrial Strategy and infrastructure programme including greatly increased housebuilding, action against tax avoidance including a ban on public contracts for tax-avoiding companies, a real cap on energy prices, a ban or significant restrictions on foreign takeovers, a ban on unpaid internships, and an inquiry into Orgreave.
For the good of business, the Bank of England should be returned to democratic political control, a strict Glass-Steagall division should be introduced between investment banking and retail banking, the Freedom of Information Act should be extended to the City of London, its municipal franchise should be conformed to that of local government in general, all tax havens under British jurisdiction should be closed, non-domiciled tax status should be abolished, the Big Four accounting firms should be broken up, auditors should be banned by Statute from selling extras, they should have unlimited liability, Crown immunity should be abolished, and Limited Partnerships and Limited Liability Partnerships should be required to have at least one member who was a natural person resident in the United Kingdom.
For the good of business, the State should buy a stake in every FTSE 500 company, large enough to secure Board-level representation, for the exercise of which both the First and the Second Lords of the Treasury would be accountable to the House of Commons, so that after any investment in public services, the dividends would be distributed equally to everyone by the Treasury.
And for the good of business, public bodies and public contractors should be required by Statute to buy British wherever possible and to buy local wherever possible, while employment rights should begin with employment and apply regardless of the number of hours worked, leading to a four-day working week as soon as practicable.
A 4-day week? British workers won’t stand for such Dickensian oppression.
Yes, government involvement in industry and commerce, what could possibly go wrong?
Attlee was pro business government?
You must be joking.
This idiot promised “New Jerusalem” including NHS instead of retooling uk industries.
As a consequence, Germany overtook uk by most relevant metrics in 1952.
In fairness to the Attlee government Britain’s economy was doing rather well in exporting until the Korean War forced up raw material prices ( US demand drove them up) and re-armament diverted manpower.
Also it was politically impossible for any Party not to implement the Welfare State. “A land fit for heroes” was promised after the Great War…and not delivered. No party would have dared to do that again. Don’t forget that the Soviet Union was looked upon very sympathetically by many people during, and after, WW2…and as an example to be followed. What Britain introduced was probably the least that could be done.
Yes Germany did overtake Britain. However it didn’t have the defence costs, or empire liabilities, or debts which Britain had. West Germany was essential for the USA’s containment of Soviet Communism, and supported as such. Britain wasn’t, and the USA wasn’t prepared to prop up the British Empire.
I agree with Rand Paul on almost everything but not on tariffs. The situation is very simple. The US can no longer afford the freeloaders in the UK and EU, as well as China et al. The issue is very simple: free trade. If the countries affected don’t want tariffs then all they have to do is reduce their tariffs on US goods.
You’re missing the point, it’s not Trump who decides on taxes, it’s congress. Tariffs are a tax on the American consumer and needs to be approved by congress. National emergency in this situation is a sham, there is no emergency when it comes to tariffs, it has to be dealt with through the legislative process. Trump is behaving dictatorially again, he wants to be king. People need to wake up to the new fascism, the wannabe dictator.
It is the President who decides, because the pinheads in Congress (some time ago, the 1970s I believe) delegated the power to impose tariffs in emergencies to the President by statute, along with (gulp!) the power to determine when an emergency exists. To right this and restore the balance of powers written into the Constitution, it will take a Supreme Court decision; because even if Congress passed a bill taking that authority back, it seems very unlikely that Trump would sign it into law.
The Supreme Court will need to declare either that the determination that there is an emergency was invalid (which would involve second guessing the President on a purported issue of national security) or that Congress’s delegation of its constitutional authority over tariffs to the President was improper in the first instance (which would cast a shadow over the constitutionality of the many other federal laws in which Congress also delegated its constitutional authority to the President).
It’s utter nonsense that there is an emergency, it’s pure abuse of powers. A war or natural disaster is an emergency, not economic policy in a period where the economy is strong and unemployment is low. It’s a made up sham by Trump and the fascists in the administration, your country is going to the dogs and you are willfully blind to notice. It will become obvious when everything tanks in the next year or so, but as always the Trumpists will try to deflect the blame. Oh the people will pay dearly though.
We need another Jeb Boasberg judge with guts enough to lay down the law. There’s no question that these tariffs are unconstitutional. But all our conservative politicians and judges are like the crowd admiring the emperor’s new clothes. They realize that if they say the emperor is naked they will be in trouble, so they toady up. It’s good to hear at least Rand Paul calling out Donald Trump for being naked.