The Idaho recorder. [volume] (Salmon City, Idaho) 1886-1927, 1917-07-20

0HA-1fnat bFitAp ENa"P'1 "W"y
Of Emu!a.lon-t4o~ the TaSss Should
Dc Apportionsd.
BY EDWIN n. A. sELioMAN,
MeViekar Professor Of Political Econ
omy. Columbia University
On May %. 1917, the House Of Rep
resentatives passed an act TO provide
revenue to defray war expenses aud
for other purposes" In the original
bill as presented by the Committee OF
Ways aud Means, the additional reye-
nue. 10 be derived was estimated al 81,
$40, 10000. The amendment to the IN
come tax. which was tackled on TO the
hill during the discussion In the House,
was expected TO yield another $4,000.
900 or $5OO00OOO.
In Disgusting the House bill. two
problems arise:
|. How much should be raised by
taxationI
H. In what manner should this sum
DO ralsedI
I. How Much Should Be Raised by
Taaation3
How was the figure Of 81 .SO0OOO,O0O
arrived att The answer Il simple. When
the Secretary OF the Treasury came 70
estimate the additional war expenses
for the year l017-ls, he calculated that
they would amount 10 some $4,000,
100000. OF which S3!00000O0O0 was TO
DO allotted 10 the allies, and $4,000,
100000 was to be utilized for the do
Au.iFA In hnN
would be fair proposition to divide
this latter sum between loans and
taxes. he concluded that the amount
TO be raised by taxes was Sis0OOOO.
900
There are two extreme theories, each
Of which may be dismissed with scant
courtesy The olc IL that all war eX
pendltures should be betrayed by loans,
and the other IL that all war expendi
lures should be betrayed by taxes
Each theory Is untenable,
| II II indeed true that the burdens OF
| the war should be borne by the pres.
ent rather than the future generations;
but this does not mean that they should
be borne by this years taxation
makes the taxpayers In one or two
years bear the burden Of benefits that
ought to be distributed at least over a
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 OF the communl'
" would have To be endured But
whore 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
stlnct and highly commendable cour
age IN deciding that substantial por
ton. at least. OF the revenues should
be derived from taxation. But wher
he hit upon the plan OF $3.50 per cent.
that n, OF raising one-halr OF all do
nestle war expenditures by taxes, thu
question arises whether he did not -
too far
The relative proportion OF loans 4
taxes In after all u purely business
proposition Not to rely to large ex
tent on loans Rt the outset OF n war I
q mistake,
plsadvantaass OF Excessive Taxes.
The disadvantages OF excessive take
u the outset Of the war are as follows
/, Excessive taxes on consumptio
win cause popular resentment
2 Excessive taxes on industry W.T.
dlsarrnnge business, damp enthusiasm
and restrict the spirit OF enterprise d
the very time when the opposite
needed
3 Excessive taxes ou incomes will d.
plete the surplus available for nves
mcnts aud interfere with the placing I
tho enormous loans which win he nece
sary IN any event
1 Excessive taxes on wealth wi
cause a serious dimtnutlon ot the d
comes which are az present largel
drawn upon for the support Of educ,
tlOnal aud phihnrhrople enterprise
Moreover. these Sur'cs % suppo
would be dr cd or precisely at the tin
when the uecd Would hc greatest
s. excessive taSatien 81 tho outset
} ths war will reduce the elasticity avail
able ter the increasing demands tAa
are seen Go come,
Great Brttaia'a Policy.
Take Grcat Britain as an exampl
During the first year Of the war 4
Increased taxes emily slightly. IN orb
to keep industries going at top note
During the second year she raised
ucw taxes enly Per cent ~ her vi
expenditure purtsg she third yr
she levlcd by additional taxes lov
and above the prc-war leycn on
slightly more than II per cent % b
war expenses
n We should attempt 20 do as mu.
IN the trst year Of the war as Gre
m Britain dbl iu the third year n Wcu
suffice 70 raise by taxation Sl2io,oN
OOO 10, in order 20 be absolutely
the safe side, Il seemed advisable
fnlraaaa fha sum IN 81 EsN On tsal "a