Roanoke Rapids herald. [volume] (Roanoke Rapids, N.C.) 1914-192?, 1917-06-22
A Constructive Criticism on Tho
House Revenue Bill.
LOANS BETTER THAN TAXES
Five Reasons Why Excessive Taxes at
the Outset OF War Arc Disadvantage
ous-Grsat Britain Example Worthy
Of Emulation-How the Taxes Should
Be Apportioned.
By EDWIN r. A. sELlGMAN,

McVickar Professor Of Political Econ
omy. Columbia University.
On May 90, 1917, the House OF Rep.
resentatiyes passed IN act ITO provide
revenue to defray war expenses and
for other purposes" In the original
bill as presented by the Committee OF
Ways and Means. the additional reve.
nue. to be derived was estimated at ST.
8l0,i20,O00 The amendment to the In.
come tax. which was tackled Oh to the
bill during the discussion In the House,
was expected to yield another $4,000
600 or $50OOO,0O0.
In discussing the House bill, two
problems arise.
|. How much should be raised by
taxation?
H. In what manner should this sum
be rnisedi
|. How Much Should Be Raised by
Taxation7
How was the figure Of $1,S00,000, 900
arrived at? The answer is simple. When
the Secretary Of the Treasury came to
estimate the additional war expenses
for the year l0l7.1S. he calculated that
they would amount to some $0UO,-
100000. Of which $4,000, 100000 was Il
be allotted to the allies. and $780,.
100000 was to he utilized for the do
nestle purposes. Thinking that II
would be fair proposition to divide
this latter sum between loans and
taxes, he concluded that the amount
to be raised by taxes was $l.SOO.OOO.
600.
There are two extreme theories, eacl
Of which may be dismissed with scan
courtesy. The one Is that all war ex
pendltures should he betrayed by loans
and the other Is that all war expendi
lures should be betrayed by taxes
Each theory Is untenable.
II Is indeed true that the burdens o.
the war should be 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 or two
years bear the burden OF benefits thai
ought to he distributed at least over q
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 tota
surplus of social income. Were this
absolutely necessary. the ensuing hav'
oc In the economic life of the commune
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 substantial por
ton, nj least, Of the revenues should
be derived from taxation. But wher
he hit upon the plan Of $3.50 per cent.
that is, of raising one-half Of all do
nestle war expenditures by taxes, thu
question arises whether he did not 81
too far.
The relative proportion Of loans t.
taxes Is after all purely business
proposition. Not to rely to large ex
tent on loans at the outset Of war Il
a mistake
Disadvantages Of Excessive Tsxes-
The disadvantages Of excessive taxe'
at the outset OF the war are as follows
1. Excessive taxes on consumption
will cause popular resentment
2. Excessive taxes on Industry vii
disarrangc business. damp enthusiasm
and restrict the spirit OF enterprise n
the very time when the opposite Il
needed
3. Excessive taxes on incomes will de
plete the surplus available for invest
ments aud interfere with the placing o
the enormous loans which will he neces
sary IN amy event.
4. Excessive taxes on wealth will
cause a serious dimlnution Of the I'm
comes which are ut present lnrgel,
+ drawn upon for the support OF eluca
tional and rhilanthropic enterprises
Moreover, these sources of supper
would be dried up precisely at the tint
when the need would be greatest.
s. Excessive taxation at tho outset o
the war will reduce the elasticity avail
able for the increasing demands tina
are soon te come
Great Britain's Policy.
Take Great Britain as an example
During the first year of the war she
increased taxes only slightly, IN ordel
to keep Industries going ut top notch
During the second year she raised b,
new taxes only per cent. of her wal
! ovpaptttpros hu,.inY tba ttirl Won