The Elbert County tribune., 1917-07-06
BY cowia R. A. sELieMAh.

| CO tpFoltiSNtS.
BY EDWIN r. a. sELieMAN.
acyicbar Professor Of Political Econ
omy. Coiumbia University.
On May 20 1911 the House OF Rep
esrntatives passed an act TO provide
revenue to derray war expenses and
for other ps:puses" In the original
| DILL us presented by the Committee OF
Ways and Means. the additional reve
nue to be derived was estimated at 81.
sl0.42e,000 Tile amendment to the in
come tax. which was tucked on to the
bill during the discussion In the House
was expected 10 yield another $4,000.
600 or S50.00O0oO.
In discussing the House bill. two
problems arise;
|. How much should be raised by
| taxation?
H. In what manner should this sum
| be raised?
|. How Much Should Be Raised by
Tlxation2
How was the figure of $1S00,0o0. 600
arrived at? The answer is simple When
the Secretary of the Treasury came to
estimate the additional war expenses
| Tor the year l917-1S. he calculated that
hey would amount to some $4,000
| 100000. OF Which s3.OJ0O0o.OG0 was to
| be allotted 20 the allies. and $1,000
100000 was to be utilized for the do
nestle purposes. Thinking that II
would be fair proposition 10 divide
his latter sum between loans and
axes. he concluded that the amount
o be raised by taxes was S1.S00.o00.
100
There are two extreme theories, each
| If which may be dismissed with scant
ourtesy The one Is that all war ex'
lenditures should be betrayed by loans.
md the other is that all war expcndi.
ures should be betrayed by taxes
Each theory is untenable
1t is indeed true that the burdens o.
| the war should be borne by the pres
mt rather than the future generation
)ut this does not mean that they should
)e borne by this years taxation.
Meeting all war expenses by taxation
| makes the taxpayers in one or tive
I ears bear the burden of benefits that
| ,ught to he distributed ut least over D
| lecade within the same generation.
| In the second place. when expendi
ures approach the gigantic sums ol
'resent-day warfare. the taN-only pol
| ~ would require more than the totai
urplus of social income. Were this
bsolu,ely necessary. the ensuing hav-
e in the economic life of ile commune
would have to be endured. But
| here the disasters are so great and
| the same time so unnecessary, the
| lx-dnly policy may he declared i'm
racticablc.
| Secretary McAdoo had the right In
| ,inct and highly commendable cour
| ge In deciding that substantial por
| on. nj least. OF the revenues should
| derived from taxation But when
| { hit upon the plan OF $3.50 per cent
hat is. of raising one-half of all do
| iestic war expenditures by taxes, the
| uestion arises whether he did not go
| 90 far
The relative proportion Of loans to
| axes Is after all a purely business
ropogition. Not to rely to large ex
| ent on .oans ut the outset OF war Is
| mistake
| Disadvantages of Excessive Taxes.
| The disadvantages OF excessive take
| the outset of the war are as follows
| l. Excessive taxes on consumption
will cause popular resentment.
| 2. Excessive taxes on industry vii
lisarrange business, damp enthusiasm
nd restrict the spirit of enterprise a
he very time when the opposite i,
| leeded
| 3. Excessive taxes ON incomes will de
'lete the surplus available for invest
nents and interfere with the placing
| he enormous loans which will be neces
'ary in any event.
| 4. Excessive taxes ON wealth vii
rause IL serious dimnution of the IN
ONES which are at present largel
irawn upon for the support of educu
tional and philanthropic enterprise,
Moreover. these sources of supper
would be dried up precisely at the tim
when the need would he greatest.
5. Excessive taxation at the outset
rho war will reduce tho elasticity avail.
Eble for the increasing dom ands thai
ire soon to come.
| Great Britain's Policy
Take Great Britain as an example
During the FIRST year of the war sh
increased taxes only slightly. in orde,
10 keep Industries going at top notch
| During the second gear she raised b.
iew taxes only 0 per cent. OF her wa
expenditures. During the third yea
'he levicd hy additional taxes love
md above the pre-war leyeh onl
sligh,ly mere than II per cent OF be
war cxpeascs.
| II we should attempt to do as mrc
II u first venr of the war as Gre
irifiln did IL the third year 1t won
nhicn 10 raise liy taxation sl.25oOn
no II IN order to he absolutely
ne s2fr side II seemed airisailc