Hamilton the lawyer gives a fine display, in Federalist No. 32, of the analytical abilities that made him much in demand among New York advocates, explaining that the vesting of a taxing power in the national government (a power, astoundingly, that the old Confederation Congress lacked altogether) would not displace but would be concurrent with the taxing power of the states:
“The quantity of the imposition, the expediency or inexpediency of an increase on either side, would be mutually questions of prudence; but there would be involved no direct contradiction of power.”
Hamilton makes just one slip here, writing that “all authorities of which the states are not explicitly divested in favour of the union remain with them in full vigour” (my emphasis). As John Marshall would show roughly thirty years later in McCulloch v. Maryland, the powers of the states are curbed not only by explicit prohibitions in the Constitution, but by necessary implications from the charter’s grants of power to the federal government. Since “the power to tax is the power to destroy,” Marshall said, the states could not be permitted to tax the operations of the Bank of the United States, an institution created by Congress to serve the national government’s fiscal and monetary purposes, even though any other bank might find itself subject to a state’s taxing power.
Alexander Hamilton would surely have accepted this friendly amendment of his remark in the Federalist. But it just goes to show that certain subtleties of the constitutional arrangement would be revealed only in the course of actually governing under its terms. Not all were foreseen in advance of those practical realities.
(For explanation of this recurring feature, see here.)