The Federal Property Tax Act of 1798 I

Relations between France and the fledgling USA had plummeted in the 1790s as a result of the Jay Treaty of 1794 between England and the USA. In that treaty, the USA acceded to several British demands to offer them advantageous trade relations, and, as a result, the French were quite chagrined at the US. Attempts to patch up relationships with France were to no avail, and the public revelation of the XYZ affair, in which France tried to bribe members of a US delegation to France, led to an anti-France feeling in the US that kept Federalist majorities in both houses of Congress. In 1798, after France had captured more than 315 US merchant vessels, the US and France began a "low boil" conflict known as the "Quasi War" or the "Undeclared War with France."

Whenever you have war, the government has need of money to finance the war. In this case Congress decided to pass a national property tax valuation and assessment laws to raise $2 million in direct tax in 1798. Actually Congress passed two laws in July 1798 on this subject. The first was a July 7, 1798 law to "provide for the valuation of Lands and Dwelling-Houses, and the enumeration of Slaves within the United States" (1 Stat. at Large 580). This heart of this twelve-page Act was the division of taxable property into three categories: (1) dwelling houses valued at more than $100; (2) slaves between the ages of 12 and 50; and (3) "land," which included dwelling houses valued at $100 or less, urban lots and other things simply called "land." Section 8 of the Act was crucial. It describes the work of the "Commissioners" (i.e., the individual who, along with his assistants, was authorized in each of the 16 states to carry out the law), who were to hire assessors to do the following:

"Pursuant to which regulations and instructions, the said commissioners shall, jointly or severally, direct and cause the said assessors, and each of them, to inquire after and concerning all lands, dwelling-houses and slaves in their respective assessment districts, by reference to any records or documents, and to any lists of assessment taken under the laws of their respective states, and by all other lawful ways and means; and to value and enumerate the said dwelling-houses, lands and slaves in the following manner, to wit: Every dwelling-house above the value of one hundred dollars, with the out-houses thereto appurtenant, not exceeding two acres, in any case, shall be valued at the rate such dwelling-house, with the lot and appurtenances aforesaid, are worth in money with a due regard to situation.---All lands and town lots, except lots on which dwelling-houses above the value of one hundred dollars, with their appurtenances, are erected as aforesaid, shall be valued by the quantity, either in acres, or square feet, as the case may be, at the average rate which each separate and entire tract or lot is worth in money, in a due relation to other lands and lots, and with reference to all advantages, either of soil or situation, and to all buildings and other improvements of whatever kind, except dwelling-houses above the value of one hundred dollars, and the out-houses appurtenant thereto.---And all slaves, whether negroes, mulattoes or mestizoes, above the age of twelve, and under the age of fifty years, shall be enumerate din the assessment district in which they may, respecxtively, be kept or employed, at the time of the enumeration, except such as from fixed infirmity, or bodily disability, may be incapable of labor: Provided.....that all property, of whatever kind, coming within any of the foregoing descriptions, and belonging to the United States, or any state, or permanently exempted from taxation by the laws of the state wherein the same may be situated or possessed, shall be exempted from the aforesaid valuation and enumeration."

Phew! Is that legalese or is that legalese? I gave a big chunk of the most important section of the statute in order to show you what is involved in trying to make sense of old statutes. What is interesting to note is that for all the complex words here and in the other 11 pages of the statute, the central aspect is the division of taxable property into three categories.

The Second Statute and Compiling the Tax Lists

When tax is assessed, you need two statutes: one to enumerate and one to value and assess a tax on property (or income). Thus, Congress passed a second law on July 14, 1798 (1 Stat. at Large 497), eight pages in length, which provided for the actual collection of the tax. Entitled "An act to lay and collect a direct tax within the United States," the statute provided for a "direct tax of two millions of dollars" (Sec. 1) on the 16 states. I don't know how the figure of $2 million was decided upon, but that would be an interesting question to answer.

In any case, an example of assessment would be the $77,705.36 and two mills assessed on New Hampshire or $260,435.31 and two mills on Massachusetts. The assessments would begin a few months after the passage of the act.

The next essay describes how the tax was allocated and what remains of some of these direct tax rolls from 1798. Then I will talk briefly about the "tax revolt" that resulted from this tax (The earliest tax revolt in the United States of America was the Whiskey Rebellion, also in PA, earlier in the decade).

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