Judsonia weekly advance., 1917-06-13
4 Constructive Criticism on tha
 House Revenue BiH.
LOANS BETTER THAN TAXES
Five Reasons Why Excessive Taxes at the Outset of War Are Disadvantage oos-Great Britain Example Worthy of Emulaton-How the Taxes Should Be Apportioned.
By EDWIN R. A. sELIGMAN,

McV 1ckar ProfeSSor Of Political Econ-
 omy, Columbia University.
 On May 23, 1917, the House of Rep resentatives passed an act "to provide revenue to defray war expenses and for other purposes" In the original bill as presented by the Committee of Ways and Means, the additional reve- nue to be derived was estimated at $1, S10,420,000. The amendment to the in come tax, which was tackled on to the bill during the discussion in the House, was expected to yield another $40,000,- GOO or S5o,00O,OOO
 In discussing the House bill, two problems arise:
 l. How much should be raised by taxation?
 II. In what manner should this sum be raised?
 l. How Much Should Be Raised by
 Taxation?
 How was the figure of $1,S00O00, GOO arrived at? The answer is simple. When the Secretary of the Treasury came to estimate the additional war expenses for the year 1917-1S. he calculated that they would amount te some $6600,- 100000, of which $3,0G0000,000 was to be allotted to the allies. and $3600,- 000000 was to be utilized for the do nestle purposes Thinking that it would be fair proposition to divide this latter sum between loans and taxes, he concluded that the amount to be raised by taxes was $1 1,S00,000.- GOO.
 There are two extreme theories, each of which may be dismissed with scant courtesy The one is that all war ex- penditures should be defrayed by loans. and the other is that all war eXpendi- lures should be defrayed by taxes. Each theory is untenable.
 It is indeed true that the burdens of the war should be borne by the pres- ent rather than the future generation; but this does not mean that they should be borne by this years taxation.
 Meeting all war expenses by taxation makes the taxpayers in one or two years bear the burden of benefits that ought to be distributed at least over decade within the same generation.
 In the second place, when expendi- lures approach the gigantic, sums of present-day warfare, the taX-only pol icy would require more than the total surplus of social income. Were this absolutely necessary. the ensuing hav- oc in the economic life ofHh& communi- ty would have to be endured. But w eff at the same time so unnecessary, the taxonly policy may be declared inn practicable.
 Secretary McAdoo had the right in- stinct and highly commendable cour- age in deciding that substantial DOT tion, at least. of the revenues should be derived from taxation. But when he hit upon the plan of 50-50 per cent. that is, of raising one-half of all do- mestic war expenditures by taxes, the question arises whether he did not go too far.
 The relative proportion of loans to taxes is after all a purely business proposition. Not to rely to large ex tent on loans at the outset of war is a mistake.
 Disadvantages of Excessive Taxes.
 The disadvantages of excessive taxes at the outset of the war are as follows:
 l. Excessive taxes on consumption will cause popular resentment.
 7. Excessive taxes on industry will disarrange business, damp enthusiasm and restrict the spirit of enterprise at the very time when the opposite is needed. 3. Excessive taxes on incomes will de- plete the surplus available for invest ments and interfere with the placing of the enormous loans which will be neces- sary in any event.
 I. Excessive taxes on wealth will cause & serious diminutinn of the in l