Pierre weekly free press. (Pierre, S.D.) 1889-19??, 1917-06-21
now |! ]! SHALL WE
Z The WAR?
Constructive Criticism on The
House Revenue Bill.
LOANS BETTER THAN TAXES
Fivs Reasons Why Excessive Taxes at
the Outset Of War Are Disadvantage
ous-Great Britain Example worthy
Of Emuiation-How this Taxes Should
Be Apportioned.

Be Apportioned.
BY EDWIN r. A. SELiGMAN,
McVickar Professor of Political Econ
omy, Columbia University.
On May %, 1917, the House OF Rep
rescntdtives passed an act ITO provide
revenu to defray war expenses and
for other purposes" In the original
bill as presented by the Committee of
Ways and Means, the additional reve-
u to be derived was estimated at ST.
810,42O,OW. The amendment to the in
come tax, which was tackled ON to the
bill during the discussion Iii the House,
was expected to yield another $4,000
000 o. $%5O,0O0,OO0.
In discussing the House bill. two
problems arise:
!. How much should be raised by
taxation?
II. In what manner should this sum
be raised?
/. How Much Should Be Raised by
Taxation7
How was the figure OF 81, SOC, O0O, 900
arrived at? The answeri is. simple. When
the Secretary Of the Treasury came to
estimate the additional war expenses
for the year 1917-18, be calculated that
they would amount to some $6,GOO,.
100000, of which $1,000. 000, 900 was to
be allotted to the allies. and So, 5000,
100000 was to be utilized for the do
nestle purposes. Thinking that it
would be a fair proposition to divide
this latter sum between loans and
taxes, hc concluded that the amount
to be raised by taxes was 81, 100000
600.
There are two extreme theories, each
of which may be dismissed with scant
courtesy. The is that all war ex.
penditures should be betrayed by loans,
and the other is that all war expendi
lures should be betrayed by taxes
Each theory is untenahle.
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 Wean 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 a
decade within the anne generation.
In the second place, when expendi.
lures approach the gigantic sums Of
p~resent-day warfare, the tax-only pol
Icy would require more than the total
surplus Of social income. Were this
absolutely necessary, the ensuing hay
oc in the economic life of the teommuni-
ty would have to 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 commendable cour-
age In deciding that a substantial por-
ton, at least, of the revenues should
be derived from taxation. But when
heshit upon the plan Of $3.50 per cent,
that IS, Of raising ~one-Ialf of all do
nestle 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 a l,srge ex-
tent OF loans at the outset OF a war is
q mistake.
Disadvantages Of Excessive Taxes.
n The disadvantages Of excessive taxes
90 kNn nv.fSnt nf %hn ~ = - pot.
Excessive taxes on consumption
viii cause popular resentment.
SExcessive taxes on industry will
disarrange business, damp enthusiasm
md restrict the spirit OF enterprise at
ssthe very time when the opposite is
needed.
Excessive taxes on incomes will de.
Rlete the surplus available for invest
sInents and interfere with the placing 81
h6senormous loans which Will be necess
Nary III any event.
45Excessiye taxes on wealth Will
ssause 9 serious diminution or the In
comes which are at present largely
araWn upon for The support of educa-
tionaai and philnnthropic enterprises,
sSMok11oTer, these sources Of support
NQuldab dried ups precisely al the dime
staae need would ~ greatest.
8lxSssslvs tsxation & the outset st
S1lSsWS.ialr viii rsdhcs tie sIasticity avail.
ShlAs& tn Increasing dsmands that
9peas a come Y
sss 0ssat Rritainss Policy.
Rritain - ans ax.v,rin