The History Book Club discussion

This is the thread for the discussion of FEDERALIST. NO 32.

This paper is titled CONCERNING THE GENERAL POWER OF TAXATION (CONT'D)


This paper was written by Alexander Hamilton.

by Alexander Hamilton

Hello Folks,

We will be continuing with the next paper of the Federalist Papers - Federalist No. 32.

FEDERALIST No. 32 CONCERNING THE GENERAL POWER OF TAXATION (CONT'D) (Written by Alexander Hamilton)
February 06, 2012 - February 12, 2012

If you are catching up, that is no problem; we have a thread dedicated to each paper so you can catch up when and as you are able.

Bentley

Folks...on to Federalist 32.

Now we find ourselves on Federalist 32 which is a continuation.

We will always continue to move on doing one batch of papers after another; but please also feel free to get caught up and post any of your thoughts on this paper and/or on any of the other papers which were assigned from weeks past. There is a ton of stuff to discuss about previous papers even though we are opening up discussion on the next paper.

FEDERALIST No. 32

FEDERALIST No. 32 CONCERNING THE GENERAL POWER OF TAXATION (CONT'D) (Written by Alexander Hamilton)

Links to 32:

http://federali.st/32

You can also listen to them being read orally to you:

Federalist 32 audio:

LibraVox

http://ia600208.us.archive.org/14/ite...

A much better oral reading:

http://michaelscherervoice.com/the-fe...

Source: Michael Scherer Voice

Federalist No. 32 is an essay by Alexander Hamilton, the thirty-second of the Federalist Papers.

It was published on January 2, 1788 under the pseudonym Publius, the name under which all the Federalist Papers were published. This is the third of seven essays by Hamilton on the then-controversial issue of taxation. It is titled, "The Same Subject Continued: Concerning the General Power of Taxation."

The Federalist Papers, as a foundation text of constitutional interpretation, are frequently cited by American jurists. Of all the essays, No. 32 is the fifth-most frequently cited.

Source: Wikipedia

This is a summary done by Tea Party: (a little convoluted)

The Federalist Papers Summary No 32: Hamilton
January 2, 1788

This paper discussed some of the States rights taken by the Union and some remaining with the States in the proposed constitution and gives insight into the intent of the constitution in this area. “The individual States should possess an independent and uncontrollable authority to raise their own revenues for the supply of their own wants”. “But as the plan of the Convention aims only at a partial Union or consolidation, the State Governments would clearly retain all the rights of sovereignty which they before had and which were not by that act exclusively delegated to the United States.”

There are three areas of exclusive jurisdiction of the Federal Government in the constitution. One is over what is now Washington, DC, given in the last clause of the 8th section of the 1st article. The second is in the first clause of the same section which empowers Congress “to lay and collect taxes, duties, imposts and excises” and the 2nd clause of the 10th section declares that “no State shall” without the consent of Congress, “lay any imposts or duties on imports or exports except for the purpose of executing its inspection laws”. Another clause restricts States from placing a tax or duties on Articles exported from any State. The next paragraph will explain why these clauses are in the document even though they seem to say the same thing? (Also does this prohibit a sales tax on items purchased over the internet from another State unless approved by Congress?) . The third case declares that Congress shall have power “to establish an UNIFORM RULE of naturalization throughout the United States”.

Therefore the States have “the power of imposing taxes on all articles other than exports and imports”. But then he goes on and on discussing this relatively simple statement. Why, it sounds simple enough? Because the discussion explains how the founders viewed Federal and particularly States rights in the Constitution. A right or power is taken from the States only if it is precisely mentioned in the proposed Constitution. So the constitution explicitly says States cannot place duties on exports or unless approved by congress imports but says nothing about taxing other items so therefore the power to do so remains with the States as a coequal power with the Union. The statement is even stronger than that, a negation of a particular right in one area is an affirmation of all other rights in that area. The statements restricting duties on imports and exports grants the right to States to tax everything else. In the previous paragraph empowering Congress “to lay and collect taxes, duties, imposts and excises” does not prevent States from doing the same so it takes a second clause to restrict the States but then Congress might want to allow States to lay taxes on imports so it required a separate clause for that. Therefore individual State’s sovereignty remains in all areas unless explicitly granted solely to the Union or taken explicitly from the States in the constitution.

He states that is why section 10 of the first article is included, to explicitly make it clear that the States have no authority in the areas mentioned.

Grade Saver's Interpretation:

Essay 32 - Summary

This paper discusses the powers of the states and the federal government to impose taxes on the people. It discusses the notion of concurrent powers and exclusive powers as they relate to taxation.

Concurrent powers are those that both the states and federal government share. Exclusive powers are those that only the states or the federal government can exercise.

In the case of taxes, the authority of the federal government to levy taxes does not preclude the state governments from doing the same thing since taxation is a concurrent power. The only restriction on the authority of the state governments to levy taxes relates to duties on imports and exports. Congress can levy such taxes, but state governments can only do so with the consent of Congress.

Hamilton acknowledges that the concurrent power of taxation could lead to situations in which state governments and the national government impose taxes on the same item, a situation that might be “inexpedient.” However, Hamilton asserts that the prudence of governments can be relied on to avoid such situations. It is not necessarily a “direct contradiction of power” for a state government and Congress to impose the same tax.

Analysis

Hamilton assuages the fear that granting the national government the ability to levy taxes will preclude the states from doing the same thing. Opponents of the constitution feared that if only the federal government could generate revenue, the state government would be left in a severely weakened position.

By protecting the authority of states to impose taxes directly on their inhabitants, the constitution ensures that states remain relevant and effective. This paper illustrates the founders’ attempt to balance power between state and federal government.

Another Interpretation:

The Same Subject Continued (No. 32)

In Federalist Paper number 32, Hamilton continues his discussion of the taxing power of the federal government. I guess Madison and Jay have left all the financial stuff to Hamilton, which makes sense, I suppose, but seems a bit unfair, as well. At any rate, Hamilton addressed the concern that this new taxing power would eliminate the states' own ability to tax.

Anti-federalists were apparently making noises that these new powers might be interpreted to mean that only the feds can tax. Nonsense, Hamilton says. Because the new Constitution "aims only at a partial union or consolidation, the State governments would clearly retain all the rights of sovereignty which they before had, and which were not, by that act, exclusively delegated to the United States." This important principle was reinforced in 1791 by the Tenth Amendment to the Constitution, and subsequently ignored by the Supreme Court in 1941. So for 153 years, Hamilton was correct -- the Constitution leaves to the states all those powers they already had, unless the Constitution specifically says otherwise, including the power to tax.

This all makes good logical sense, and is kind of the point of the provision. The Framers of the Constitution wanted free trade among the states, with no tariff barriers on goods travelling from state to state, and no variance among the states in tariffs on foreign goods. It's the sort of free-trade zone the EU has created among its member-states, but with a lot less regulation. So, Pennsylvania might tax liquor and gasoline more than New Jersey does (and they do) but Pennsylvania can't tax New Jersey liquor or Canadian liquor more than Pennsylvania liquor.

As an example, Hamilton cites the provision that prevents the states from taxing imports and exports without Congress's permission. Implicit in this prohibition, Hamilton says, is the idea that states can still tax things that aren't imports and exports. They can even tax imported goods once they're here, or exported goods before they leave, they just can use tariffs and taxes to discriminate between foreign and domestic goods; only the federal Congress may do that.

Where the Constitution is silent as to the states' right to tax, Hamilton says they have the same powers they've always had. Where both federal and state government are allowed to tax, both may do so. "It is, indeed, possible that a tax might be laid on a particular article by a State which might render it inexpedient that thus a further tax should be laid on the same article by the Union; but it would not imply a constitutional inability to impose a further tax."

Source: Not available any longer

Paragraph One:

Although I am of opinion that there would be no real danger of the consequences which seem to be apprehended to the State governments from a power in the Union to control them in the levies of money, because I am persuaded that the sense of the people, the extreme hazard of provoking the resentments of the State governments, and a conviction of the utility and necessity of local administrations for local purposes, would be a complete barrier against the oppressive use of such a power; yet I am willing here to allow, in its full extent, the justness of the reasoning which requires that the individual States should possess an independent and uncontrollable authority to raise their own revenues for the supply of their own wants. And making this concession, I affirm that (with the sole exception of duties on imports and exports) they would, under the plan of the convention, retain that authority in the most absolute and unqualified sense; and that an attempt on the part of the national government to abridge them in the exercise of it, would be a violent assumption of power, unwarranted by any article or clause of its Constitution.

Discussion Question:

Alexander Hamilton seems to feel that the a) sense of the people, b) the extreme hazard of provoking the resentments of the State governments, and/or c) a conviction of the utility and necessity of local administrations for local purposes, would be a complete barrier against the oppressive use of such a power would disallow the Federal government from encroaching upon state rights and their ability to levy monies for their support. Do you agree with Hamilton that any of these three reasons have any relevance today or would stop the Federal Government from doing so?

Hamilton further states in the above paragraph the following:

"yet I am willing here to allow, in its full extent, the justness of the reasoning which requires that the individual States should possess an independent and uncontrollable authority to raise their own revenues for the supply of their own wants. And making this concession, I affirm that (with the sole exception of duties on imports and exports) they would, under the plan of the convention, retain that authority in the most absolute and unqualified sense; and that an attempt on the part of the national government to abridge them in the exercise of it, would be a violent assumption of power, unwarranted by any article or clause of its Constitution.

Discussion Question:

Hamilton states that revenues should not be supplied to the States on duties on imports and exports. Why is that the one exception that he identifies as being Federally regulated and collected?

Hamilton states that the states should possess an independent and uncontrollable authority to raise their own revenues for the supply of their own wants. Do you feel that the states possess and have "uncontrollable authority" in this day and age to do so? Why and/or why not. Be specific.

One of the most famous quotes attributed to 32 is the following:

"But as the plan of the convention aims only at a partial union or consolidation, the State governments would clearly retain all the rights of sovereignty which they before had, and which were not, by that act, EXCLUSIVELY delegated to the United States." --Alexander Hamilton, Federalist No. 32

I guess it had everything to do with states rights and what they entailed and what they did not. And that by embracing the Constitution (which had a stronger central government) which also would be collecting money from us for its survival, in the form of those dreaded taxes (at least at this time) - that in exchange that the states would not be losing their separate identities or worse.

Discussion Question:

Do you think that states rights has been eroded over time or preserved? Why and/or why not?

An interesting article on the Papers as a whole: (also very relevant to understanding Federalist Paper No. 32):

Explaining the Constitution: The Federalist papers
"But what is government itself but the greatest of all reflections on human nature?"

— James Madison, The Federalist Papers, 1787-88

For Thomas Jefferson, one of America's Founding Fathers and later the new nation's third president, The Federalist Papers were "the best commentary on the principles of government ... ever written." For the 19th-century British philosopher, John Stuart Mill, The Federalist — as the collection of 85 short essays was usually titled — was "the most instructive treatise we possess on federal government." The astute French political commentator, Alexis de Tocqueville, writing in 1835, thought it "an excellent book, which ought to be familiar to the statesmen of all countries."

Contemporary historians, jurists, and political scientists have generally agreed that The Federalist is the most important work of political philosophy and pragmatic government ever written in the United States. It has been compared to Plato's Republic, Aristotle's Politics, and Thomas Hobbes' Leviathan. And it has been consulted by the leaders of many new nations in Latin America, Asia, and Africa as they were preparing their own constitutions.

The delegates who signed the draft U.S. Constitution in Philadelphia on September 17, 1787, stipulated that it would take effect only after approval by ratifying conventions in 9 of the 13 states. Although not stipulated, a negative vote by either of two key states — New York or Virginia — could destroy the whole enterprise because of these states' size and power. Both New York and Virginia delegates were sharply divided in their opinions of the Constitution. And New York Governor George Clinton had already made clear his opposition.

One would imagine that a work so highly praised and so influential as The Federalist Papers was the ripe fruit of a long lifetime's experience in scholarship and government. In fact, it was largely the product of two young men: Alexander Hamilton of New York, age 32, and James Madison of Virginia, age 36, who wrote in great haste — sometimes as many as four essays in a single week. An older scholar, John Jay, later named as first chief justice of the Supreme Court, contributed five of the essays.

Hamilton, who had been an aide to Washington during the Revolution, asked Madison and Jay to join him in this crucial project. Their purpose was to persuade the New York convention to ratify the just-drafted Constitution. They would separately write a series of letters to New York newspapers, under the shared pseudonym "Publius," in which they would explain and defend the Constitution.

It was Hamilton who initiated the project, outlined the sequence of topics to be discussed, and vigorously addressed most of them in 51 of the letters. But Madison's 29 letters have proved to be the most memorable in their combination of frankness, balance, and reasoning power. It is not clear whether The Federalist Papers, written between October 1787 and May 1788, had a decisive effect on New York's grudging ratification of the Constitution. But there can be no doubt that the essays became, and remain, the most authoritative commentary on that document.

A New Kind of Federalism

The first and most obvious approach The Federalist Papers used was a new definition of federalism. Having just won a revolution against an oppressive monarchy, the former American colonists were in no mood to replace it with another centralized, unrestrained regime. On the other hand, their experience with instability and disorganization under the Articles of Confederation, due to jealousy and competition between the individual states, made them receptive to the creation of a stronger national government. A number of The Federalist Papers argued that a new kind of balance, never achieved elsewhere, was possible. Indeed, the Papers were themselves a balance between the nationalist propensities of Hamilton, who reflected the commercial interests of a port city, New York, and the wariness of Madison, who shared the suspicion of distant authority that was widely held by Virginia farmers.

Madison proposed that, instead of the absolute sovereignty of each state under the Articles of Confederation, the states would retain a "residual sovereignty" in all those areas that did not require national concern. The very process of ratification of the Constitution, he argued, symbolized the concept of federalism rather than nationalism. He said: "This assent and ratification is to be given by the people, not as individuals composing one entire nation, but as composing the distinct and individual states to which they respectively belong.... The act, therefore, establishing the Constitution, will not be a national but a federal act."

Hamilton suggested what he called a "concurrency" of powers between the national and state governments. But his analogy of planets revolving around the sun yet retaining their separate status placed greater emphasis on a central authority. Hamilton and Jay (also from New York) cited examples of alliances in ancient Greece and contemporary Europe that invariably fell apart in times of crisis. To the authors of The Federalist Papers, whatever their differences, the lesson was clear: survival as a respected nation required the transfer of important, though limited, powers to the central government. They believed that this could be done without destroying the identity or autonomy of the separate states.

Checks and Balances

The Federalist Papers also provide the first specific mention found in political literature of the idea of checks and balances as a way of restricting governmental power and preventing its abuse. The words are used mainly in reference to the bicameral legislature, which both Hamilton and Madison regarded as the most powerful branch of government. As originally conceived, the presumably impetuous, popularly elected House of Representatives would be checked and balanced by a more conservative Senate chosen by state legislatures. (The Seventeenth Amendment to the Constitution, added in 1913, changed this provision to mandate the popular election of senators.) On one occasion, however, Madison argued more generally that "office should check office," and Hamilton observed that "a democratic assembly is to be checked by a democratic senate and both these by a democratic chief magistrate."

In his most brilliant essay (Number 78), Hamilton defended the Supreme Court's right to rule upon the constitutionality of laws passed by national or state legislatures. This historically crucial power of "judicial review," he argued, was an appropriate check on the legislature, where it was most likely that "the pestilential breath of faction may poison the fountains of justice." Hamilton explicitly rejected the British system of allowing the Parliament to override by majority vote any court decision it finds displeasing. Rather, "the courts of justice are to be considered the bulwarks of a limited Constitution against legislative encroachments." Only the painstaking and difficult process of amending the Constitution, or the gradual transformation of the Supreme Court's members to another viewpoint, could reverse the Court's interpretation of that document.

Human Nature, Government and Individual Rights

Behind the notion of checks and balances lay a profoundly realistic view of human nature. While Madison and Hamilton believed that people at their best were capable of reason, self-discipline, and fairness, they also recognized their susceptibility to passion, intolerance, and greed. In a famous passage, after discussing what measures were needed to preserve liberty, Madison wrote: "It may be a reflection on human nature that such devices should be necessary to control the abuses of government. But what is government itself but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: You must first enable the government to control the governed; and in the next place oblige it to control itself."

In the most striking and original of The Federalist Papers (Number 10), Madison addressed this double challenge. His central concern was the need "to break and control the violence of faction," by which he meant political parties, and which he regarded as the greatest danger to popular government: "I understand a number of citizens ... are united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens, or to the permanent and aggregate interests of the community."

These passions or interests that endanger the rights of others may be religious or political or, most often, economic. Factions may divide along lines of haves and have-nots, creditors and debtors, or according to the kinds of property possessed. Madison wrote: "A landed interest, a manufacturing interest, a mercantile interest, a moneyed interest, with many lesser interests, grow up of necessity in civilized nations, and divide themselves into different classes, actuated by different sentiments and view. The regulations of these various and interfering interests forms the principal task of modern legislation...."

How can fair, rational, and free people mediate so many competing claims or the factions that derive from them? Since it is impossible to outlaw passion or self-interest, a proper form of government must be able to prevent any faction, whether minority or majority, from imposing its will against the general good. One defense against an overbearing faction, Madison said, is the republican (or representative) form of government, which tends "to refine and enlarge the public views by passing them through the medium of a chosen body of citizens."

But even more important, according to Madison, was broadening the geographic and popular basis of the republic, as would happen under the national government proposed by the new Constitution. He wrote: "As each representative will be chosen by a greater number of citizens in the large than in the small republic, it will be more difficult for unworthy candidates to practice with success the vicious arts by which elections are too often carried.... The influence of factious leaders may kindle a flame within their particular states but will be unable to spread a general conflagration through the other states."

What is being urged here is the principle of pluralism, which welcomes diversity both for its own sake as a testimony to individual variety and freedom, but even more crucially for its positive effect in neutralizing conflicting passions and interests. Just as the great variety of religious faiths in the United States makes unlikely the imposition of a single established church, so the variety of states with many divergent regions and concerns makes unlikely the national victory of an inflamed and potentially oppressive faction or party. A confirmation of Madison's argument can be found in the evolution of the major American political parties, which have tended to be moderate and nonideological because they each encompass such a diversity of sectional and economic interests.

Source: https://web-archive-2017.ait.org.tw/i...

Continued:

The Separation of Powers

The idea of separating powers among the various branches of government to avoid the tyranny of concentrated power falls under the larger category of checks and balances. But The Federalist Papers see another virtue in the separation of powers, namely, an increase in governmental efficiency and effectiveness. By being limited to specialized functions, the different branches of government develop both an expertise and a sense of pride in their roles, which would not be the case if they were joined together or overlapped to any considerable degree.

Qualities that might be crucial to one function could be ill-suited for another. Thus Hamilton termed "energy in the executive" as essential to defending the country against foreign attacks, administering the laws fairly, and protecting property and individual liberty, which he viewed as closely related rights. On the other hand, not energy but "deliberation and wisdom" are the best qualifications for a legislator, who must earn the confidence of the people and conciliate their divergent interests.

This difference of needs also explains why executive authority should be placed in the hands of one person, the president, since a plurality of executives could lead to paralysis and "frustrate the most important measures of government, in the most critical emergencies of the state." That is, once the legislature, reflecting the will of the people, has rendered its deliberate and fully debated judgment by passing a law, the executive must firmly carry out that law without favoritism, resisting any self-interested pleas for exception. And in the event of an attack by a foreign state, the executive must have the power and energy to respond immediately and forcefully. As for the judiciary, the qualities wanted there are special as well: not the executive's energy and dispatch, nor the legislator's responsiveness to popular sentiment or ability to compromise, but "integrity and moderation." And, by being appointed for life, judges would have freedom from popular, executive, or legislative pressures.

The Perennial Questions of Politics

The memorable observations in The Federalist Papers about government, society, liberty, tyranny, and the nature of political man are not always easy to locate. Much in these essays is dated or repetitious or archaic in style. The authors had neither the time nor the inclination to put their thoughts in an orderly and comprehensive form. Yet The Federalist Papers remain indispensable to anyone seriously interested in the perennial questions of political theory and practice raised by Hamilton and Madison. "No more eloquent, tough-minded, and instructive answers have ever been given by an American pen," wrote the distinguished political historian, Clinton Rossitor in the 20th century. "The message of The Federalist reads: no happiness without liberty, no liberty without self-government, no self-government without constitutionalism, no constitutionalism without morality — and none of these great goods without stability and order."

Source: https://web-archive-2017.ait.org.tw/i...

In a previous conversation, Bea made this observation: Federal mandates only govern programs that receive federal funds.

For example, states have rights to build state roads. However, state highways are often built, in part, with federal grant money. This of course ultimately comes from federal revenues, including tax revenues.

So at some point the federal government says states cannot receive federal money for roads if they allow, say, persons under the age of 21 to buy alcohol. (This is just a hypothetical example.)

The states continue to have the total right to regulate alcohol sales (as per the 21st amendment). They could also build roads entirely with state funds. But if the state wants federal highway money, it will have to set the drinking age at 21. Admittedly, this is powerful leverage. On the other hand, the feds probably were intended by the founders to have the right to decide how to spend federal tax revenues.

Just my take on it.

https://en.wikipedia.org/wiki/Twenty-...

The immigration example is different as it has nothing to do with taxation but with the federal responsibility to conduct foreign relations, etc.

This was an excerpt from Conservative, Republican Cathy Gillespie:

The purpose of Federalist 32 seems to be to reassure citizens that the Federal Government’s power to tax will not preclude states from raising the revenue they need to operate their state governments. While making that point, Publius gives us an excellent tutorial in the balance of power that exists between the federal government and the states, under the Constitution:

“the State governments would clearly retain all the rights of sovereignty which they before had, and which were not, by that act, EXCLUSIVELY delegated to the United States.”

This sounds very much like the language in the 10th Amendment:

Amendment X: The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Publius goes on to explain the three types of cases where the Federal government is granted exclusive authority, overriding state sovereignty:

(1) “Where the Constitution in express terms granted an exclusive authority to the Union;

(2) where it granted in one instance an authority to the Union, and in another prohibited the States from exercising the like authority;

(3) and where it granted an authority to the Union, to which a similar authority in the States would be absolutely and totally CONTRADICTORY and REPUGNANT.

Making it clear that states will be allowed to levy taxes on “all other articles,” except imports and exports, Publius does caution that it might not always be prudent for the federal government and states to exercise their concurrent taxation powers and tax the same articles, but that “an inconvenience of the exercise of powers” doesn’t “extinguish a pre-existing right….” Most people would agree that modern day levels of taxation at the state and federal levels have passed the point of prudence!

The balance of power between the federal and state governments Hamilton describes in the beginning of the essay was structured to ensure our freedom. The disturbance in the equilibrium of the balance of power between the federal and state governments has resulted in greater levels of taxation at the state and federal levels, thus limiting our personal financial freedom and damaging the economy.

As unfunded federal mandates on the state governments have grown, the states’ need to raise revenue has increased. IRS.gov lists only nine states without an income tax! As the states’ need to raise revenue has increased, they have become more and more dependent on federal dollars, with mandates attached, thus altering the balance of power even more. As the federal government has ventured in to areas our founders never intended, its need to raise revenue has increased as well.

Note: The above views do not necessarily express the views of the History Book Club. They are presented as another source of how Paper 32 is interpreted by others. We remain completely neutral in our views and only post various outside sources to identify the many varied viewpoints and interpretations.

Let us look at the next paragraph - folks I will be going back and forth between some of the previous papers that we may not have covered as much and we will continue to add to all of the threads as new material and sources come up. Please feel free to add material of your own.

But remember you must always cite sources and there is no self promotion.

Second Paragraph

An entire consolidation of the States into one complete national sovereignty would imply an entire subordination of the parts; and whatever powers might remain in them, would be altogether dependent on the general will. But as the plan of the convention aims only at a partial union or consolidation, the State governments would clearly retain all the rights of sovereignty which they before had, and which were not, by that act, exclusively delegated to the United States. This exclusive delegation, or rather this alienation, of State sovereignty, would only exist in three cases: where the Constitution in express terms granted an exclusive authority to the Union; where it granted in one instance an authority to the Union, and in another prohibited the States from exercising the like authority; and where it granted an authority to the Union, to which a similar authority in the States would be absolutely and totally contradictory and repugnant. I use these terms to distinguish this last case from another which might appear to resemble it, but which would, in fact, be essentially different; I mean where the exercise of a concurrent jurisdiction might be productive of occasional interferences in the policy of any branch of administration, but would not imply any direct contradiction or repugnancy in point of constitutional authority. These three cases of exclusive jurisdiction in the federal government may be exemplified by the following instances: The last clause but one in the eighth section of the first article provides expressly that Congress shall exercise exclusive legislation over the district to be appropriated as the seat of government. This answers to the first case. The first clause of the same section empowers Congress to lay and collect taxes, duties, imposts and excises; and the second clause of the tenth section of the same article declares that, no state shall, without the consent of Congress, lay any imposts or duties on imports or exports, except for the purpose of executing its inspection laws. Hence would result an exclusive power in the Union to lay duties on imports and exports, with the particular exception mentioned; but this power is abridged by another clause, which declares that no tax or duty shall be laid on articles exported from any State; in consequence of which qualification, it now only extends to the duties on imports. This answers to the second case. The third will be found in that clause which declares that Congress shall have power to establish an uniform rule of naturalization throughout the United States. This must necessarily be exclusive; because if each State had power to prescribe a distinct rule, there could not be a uniform rule.

I found this explanation of federalism which may be helpful:

The U.S. Constitution created a governmental structure for the United States known as federalism. Federalism refers to a sharing of powers between the national government and the state governments. The Constitution gives certain powers to the federal government and reserves the rest for the states. Therefore, while the Constitution states that the federal government is supreme with regard to those powers expressly or implicitly delegated to it, the states remain supreme in matters reserved to them. This supremacy of each government in its own sphere is known as separate sovereignty, meaning each government is sovereign in its own right.

Both the federal and state governments need their own court systems to apply and interpret their laws. Furthermore, both the federal and state constitutions attempt to do this by specifically spelling out the jurisdiction of their respective court systems.

For example, since the Constitution gives Congress sole authority to make uniform laws concerning bankruptcies, a state court would lack jurisdiction in this matter. Likewise, since the Constitution does not give the federal government authority in most matters concerning the regulation of the family, a federal court would lack jurisdiction in a divorce case. This is why there are two separate court systems in America. The federal court system deals with issues of law relating to those powers expressly or implicitly granted to it by the U.S. Constitution, while the state court systems deal with issues of law relating to those matters that the U.S. Constitution did not give to the federal government or explicitly deny to the states.

http://www.uscourts.gov/EducationalRe...