Clinch Valley news. [volume] (Jeffersonville, Va.) 18??-2019, 1917-06-15

ous-Great Britain Example Worth,
of Emulation-how the Taxes ShouIe
Be Apportionod.
BY EDWIN r. A. SELIGMAN,
NcVickar Professor of Political Econ.
omy, Columbia University
On May %, 1917, the House OF Rep
fesentatives passed an uct ito provide
revenue to defray war expenses and
for other purposes" In the Original
bill rs presented by the Committee OF
Ways and Means. the additional rcve
nue. to be derived was estimated ut S., :.
SlO,42oOOO. The amendment to the In
come tax, which was tackled OH to the
Dill during the discussion In the House.
was expected to yield another $40 600.
600 or $50,000,00O.
In discussing the House bill. two
problems arise:
l. How much should be raised by
taxation?
IL. In what manner should this sum
be raised?
9 L. How Much Should Be Raised by
Taxation?
LOW was the figure OF 81 500. 600, 600
arrived at! Tic answer is simple. When
the Secretary of the Treasury came to
estimate the additional war expenses
for the year 191T-1S. he calculated TINT
they would amount to some $4,000
100000. of which $3.OOO, OOO, 600 was ia
he allotted TO the allies. and S3GOO .
oOo,OOO WIS to be utilized for the do.
nestle purposes Thinking that n
would Inc fair proposition to divide
This latter sum between loans and
taxes. he concluded that the amount
to be raised by taxes WAS 81. 100000.
600.
There are two extreme theories. each
OF Wh1ch may he dismissed with scant
courtesy The ono is that all war ey.
pendlturcs should be betrayed by loans.
and the other is that all war cypcndi
lures should be betrayed by taxes
Each theory is untcnablc.
1t is indeed true that the burdens of
the war should be borne by the pres
emf rather than the future generation:
hut this does not mean that they should
he 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 he distributed mt least over n
decade within the same generation
In the second place. when expcndi.
lures approach the gigantic sums of
prescnt-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 of the communi
ty would have 10 be endured. But
where the disasters are so great and
at the same time so unnecessary. the
tax-only policy may be declared i'm
practicable.
Secretary McAdoo had the right in.
stinct and highly commcndnble cour-
age in deciding that II substantial nor
ton, Mt least, of the revenues should
be derived from taxation. But when
he hit upon the plan of $3.50 per cent,
that is, of raising onc-half of all do
nestle war expenditures by taxes, the
question arises whether he did not 20
too far.
The relative proportion of loans to
taxes is after all purely business
proposition. Not to rely to large ex-
tent on loans ut the outset of war is
n mistake.
Disadvantages of Excessive Taxos.
The disadvantages of excessive taxes
at the outset of the war are rs follows:
1. Excessive taxes on consumption
Will cause popular resentment.
2 Excessive taxes on industry will
disarrangc business damp enthusiasm
ana restrict the spirit OF enterprise ut
the very time when the opposite is
needed
3. Excessive taxes OH incomes will de.
plete the surplus available for invest.
ments and Interfere with the placing OF
the enormous loans which will be ncccs.
snry in any event
4. Excessive taxes OH wealth will
cause serious diminution of the in
comes which are at present largely
drawn upon for the support of educa-
tionai and philaIitlropic enterprises.
Moreover these sources of support
would be dried up precisely at the time
when the need would be greatest.
5. Excessive taxation at tho outset of
the war will reduce the elasticity avail
able for the increasing demands that
are soon to come.
Great Britain's Policy.
Take Great Britain as an example.
During the first year of the war she
Increased ta:cs only slightly, in order
to keep industries going ut top notch.
g During the second year she raised by
new taxes only o per cent. of her war
expenditures. During the third year
she levied by additional taxes (over
and above the prc-war leveD only
slightly more than II per cent. of her
war expenses.
If we should attempt to do as much
in the first year of the war as Great
Britain did in the third year 1t would
suffice to raise by taxation S1,250,0OO,-
600. If. In order to be absolutely on
the safe side. it seemed advisable to
increase the sum to S1,500,O00, 900, this
should, In our opinion, be the maxi.
mum.