“Property is held and transferred on terms fixed by the States. In short, the structure of social and business relationship is built chiefly about the laws of the States. It depends upon the exercise by the States of that vastly greater share of Government power which resides in them, to the exclusion cf the Federal Government. In ordinary times nearly the entire burden of taxation represents State and local demands. Even now, despite the enormous increase of Federal taxes from pre-war years, State and local taxes far exceed the Federal requirements. Moreover, the national burden is being continually reduced, while that of the local units is growing and likely to continue to grow.”

“The federal government did not create the states; the states created the federal government.”

“It is admitted that the power of taxing the people and their property is essential to the very existence of Government, and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the Government may choose to carry it. The only security against the abuse of this power is found in the structure of the Government itself. In imposing a tax, the legislature acts upon its constituents. This is, in general, a sufficient security against erroneous and oppressive taxation. The people of a State, therefore, give to their Government a right of taxing themselves and their property, and as the exigencies of Government cannot be limited, they prescribe no limits to the exercise of this right, resting confidently on the interest of the legislator and on the influence of the constituent over their representative to guard them against its abuse.”

“Now the Constitution doesn’t say how this right is to be enforced, but it says it shall be done. And from 1793 to 1850 it depended upon the states honoring the Act. Well, that was not working, and so this federal law was substituted which provided enforcement procedures under the auspices of the federal government.”

“Without doubt, the reason for increasing demands on the Federal Government is that the States have not discharged their full duties. Some have done better and some worse, but as a whole they have not done all they should. So demand has grown up for a greater concentration of powers in the Federal Government. If we will fairly consider it, we must conclude that the remedy would be worse than the disease. What we need is not more Federal government but better local government. Yet many people who would agree to this have large responsibility for the lapses of local authority.”

“This, by the way, was a demand for the greatest increase of federal power prior to the New Deal, maybe even since the New Deal. The greatest demand for an increase in federal power was made by the Southern states in 1860. And the majority in the convention refused to adopt this, and they refused to adopt it because nobody could be elected dogcatcher in a free state who supported a federal police power over slavery in the territories.”

“The Constitution does not protect the sovereignty of States for the benefit of the States or state governments as abstract political entities, or even for the benefit of the public officials governing the States. To the contrary, the Constitution divides authority between federal and state governments for the protection of individuals.”

“If the States may tax one instrument, employed by the Government in the execution of its powers, they may tax any and every other instrument. They may tax the mail; they may tax the mint; they may tax patent rights; they may tax the papers of the custom house; they may tax judicial process; they may tax all the means employed by the Government to an excess which would defeat all the ends of Government. This was not intended by the American people. They did not design to make their Government dependent on the States. […] If the controlling power of the States be established, if their supremacy as to taxation be acknowledged, what is to restrain their exercising control in any shape they may please to give it? Their sovereignty is not confined to taxation; that is not the only mode in which it might be displayed. The question is, in truth, a question of supremacy, and if the right of the States to tax the means employed by the General Government be conceded, the declaration that the Constitution and the laws made in pursuance thereof shall be the supreme law of the land is empty and unmeaning declamation.”

“In diversity cases where there is a conflict between the laws of the states of the parties, the federal court has to determine which state’s laws to apply. New York federal courts will use a multi-factor test to determine which state has the “most significant relationship” to the legal dispute, and will use that state’s laws.”

“The modern state is largely a mechanism for transferring funds from one person to another. What we economists call public goods are provided by the state but are now only a part of it. The United States is not as far along in this procedure as many other countries, but in our case the federal government pays out in various types of transfers a significant percent of the amount it collects in taxes. Most of the European countries are even more dominated by the legacy of Bismarck.”