The Bossier banner. [volume] (Bellevue, Bossier Parish, La.) 1859-1952, 1917-06-14
HOW SHALL We
PAY FOR THE WAR?
4 Constructive Criticism On the
House Revenue Dii..!.
LOANS BETTER THU! TAXES

Five Reasons Why Excessive Taxes at
the Outset Of War Are Disadvantage
ous-Grsat Britain Example Worthy
Of Emuiation-How the Taxes Should
Be Apportioned.
BY EDWIN r. A. sELlGMAN,
Mcvickar Professor of Political Econ
omy. Columbia University.
On May o. 1917. the House Of Rep
sesentatives passed an act Ito provide
revenue to defray war expenses and
for other purposes" In the original
bill as presented 10y the Committee OF
Ways and Means. the additional reve-
nue. to be derived was estimated at ST.
SIC, 10000. The amendment to tho in
come tax, which was tackled on to the
bill during the discussion In the House.
was expected to yield another $4O.WHI.-
O0O or $5O,OOO,OOO.
In discussing the House bin. two
problems arise:
/. How much should he raised by
taxation?
II. In what manner should this sum
be FaiseQ?
L How Much Should 30 Raised by
Taxation7
How was the figure Of 81. 800, O00. 000
arrived at? The answer is simple. When
the Secretary Of the Treasury came to
estimate the additional war expenses
for the year 1017-1S he calculated that
they would amount to some $4,000
100000, Of which S3,O0O.O0O. eco vas to
be allotted to the allies. and $4,000
100000 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 he raised by taxes was S1.6oo.GO0.-
600.
There are two extreme theories, each
Of which may be dismissed with scant
courtesy. The ono is that all war ex-
pendftures should be betrayed by loans,
and the other is that all war expcudi-
lures should be betrayed by taxes.
Each theory is untcnablc.
It Is indeed true that the burdens of
| the war should lie 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 CIR two
years bear the burden Of benefits that
ought to be distributed at least ever u
decade within the same generation.
/ In the second place, when e2pendi-
lures approach the gigantic sums of
present-tlay warfare, the tax-only pol
Icy would require more than the total
absolutely necessary, the ensuing hay
&C in the economic life of the commnni-
ty would have to be endured But
where the disasters arc SO great and
| at the same time SO unnecessary, the
tax-only policy may be declared Inn
practicable.
Secretary Mc!Adoo had the right In
stinct and highly colnmcndabla cour-
age in deciding that substantial por-
tion. at least. of the revenues should
be derived from taxation But when
be hit upon the plan Of $3.50 Fer cent,
that is. Of raising one-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 larec cS-
| tnnf ri Il.
| q mistake
Disadvantages Of Excessive Taxes.
The disadvantages OF excessive tayes
ut the outset Of the war arc as fellows
1. Excessive taxes on consumption
will cause popular resentment
2. Excessive taxes ON industry will
dfSarrange business, damp enthusiasm
and restrict the spirit of enterprise al
the very time when the opposite is
needed.
3. Excessive taxes on incomes will de
plcte the surplus available for invest.
ments and interfere with the placing OF
the enormous leans which, will be neces-
sary in any event.
4. Excessive taxes on wealth will
cause s. serious din.inution OF the In
COMES which are at present largely
drawn upon for the support of c,luca
tional and philantliropic enterprises
Moreover, these sources of support
would be dried up precisely at the time
when the need would lie greatest
S. Excessive taxation at the outset oil
the war will reduce tho elasticity avail.
able for tho Increasing demands that
arc soon to come.
/ Great Britain's Policy.
Take Great Britain as an example
During tho first year Of the war slla
Increased taxes only slightly, In order
to keep industries going at top notch.
During the second year she raised Ey
new taxes only per cent. Of her wa,
expenditures. During the third year
she levied by additional taxes lover
and above the prc-war level only
slightly more than II per cent. Of bel
war expenses.
II VIC should attempt to do as much
in the first year OF the war rs Great
Britain did in the third year It would
suffice to raise by taxation $1,25O.O00,
600. II. In order to be absolutely on
the safe side. 1t seemed advisable Il
Increase the sum to 81 SOC. 900 900. this
should. In our opinion. be the maxi