Metropolis weekly gazette. (Metropolis, Ill.) 1???-19??, 1917-10-05


eus-orsat sritain Example Worthy
Of Emuistien--Hevs the Taxes Should
es Appertiensd.
ey EDWIN r. A. sELicmAN.
Mevickar Professor OF Political Econ
omy. Columbia University.
On May %. 1917. the House OF Rep
resentatives passed an act ITO provide
revenue to defray war expenses aud
for other purposes" In the original
bin as presented by the Committee OF
Ways and Means. the additional reye.
nue. to be derived was estimated at ST.
6io.I20.oo0 The amendment to the In.
come tnx. which was tackled on 10 the
bill during the discussion In the House.
was expected to yield another ss0.OO..
600 or s50.OOo.000.
In discussing the House blu two
problems arise:
|. How much should be raised By
taxationl
II. In what manner should this sum
DO raIsedg
!. How Much Should Be Raised by
Tasstionf
How was the figure Of 81 oo.000o 600
arrived att The answer II simple. When
the Secretary of fhe Treasury came to
estimate the additional war expenses
for the year f0iT-i6 he calculated that
they would amount t. some $1,000.
100000. Of which S300oOoO.o0o wax To
be allotted to the allies. and $4,000.
100000 was 10 be utilized for the DO
nestle purposes. Thinking that I;
would be IA fair proposition to divide
this latter sum between loans and
taxes. he concluded that the amount
to be raised by taxes was si.SD.ooo..
oOo.
There nrs two extreme theories, each
OF which moy bs dismissed With scnnt
courtesy. The one IL that oil war ex-
penditures should be betrayed by loans.
and the other Is that all war expendl
lures should be betrayed by iaxc3.
Each theory IL untenablc.
IL is indeed irue that the burdens Of
the war should be borne by The pres
ent rather than the future generntion.
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 that
ought TO be distributed NJ least over
decade within the same generation.
In the second place. when expcBdi-
lures approach the gigantic sums o,
present-day warfare. the ,ax-only pol.
icy would require more than the total
surplus OF social income. Were this
absolutely necessary. the ensuing hav-
&C In tho economic life Of the eommuni-
~ would have TO lie endured But
where the disasters are 80 great aud
At the same time so unnecessary. the
tax-oniy policy may be declared I'm
practicable.
Secretary McAdoo had the right In.
stinct and highly commendsble eour-
age In deciding that substantial por.
ton. at least. OF the revenues should
be derived from taxation. But when
he hit upon the plan of 500 per cent.
that IL. OF raising one bali OF all do
nestle war expenditures by taxes. the
question arises whether be did not &c
too far
The relative proportion OF loans 70
taxes IN after ell a purely business
proposition. Not 10 rely 10 large ex-
tent on loans at the outset Of war IL
q mistake.
Disadvantages Of Excessive Taxes
The disadvantages Of excessive taxes
at the outset Of the war are ns follows:
i. Excessive taxes on consumption
VIII cause popular resentment
=. Excessive taxes ON industry will
disarra nge business. damp enthusiasm
and restrict the spirit of enterprise at
the very time when the opposite 10
needed.
.. Excessive taxes on Iucomes will de-
plete the surplus available for invest.
ments and interfere with the placing of
the enormous loans which will be necea-
sary In any event
I. Excessive fuIes on wealth will
cause serious dlminution OF the In.
comes which ure Mt present largely
drawn upon for the support of educa.
tionsl and philanthropIc enterprises.
Moreover. these sources OF support
would be dried MP precisely at the time
when the ueed would be greatest.
8. Excessive taxation at the outset of
tho war will reduce the elasticity svail. &
able for the increasing demands that
are soon y come.
Great Dritain's Policy.
Take Great Britain as an example.
During the 6rst year Of the war she
Increased taxes only slightly. In order
10 keep industries going at top notch.
During tho second year she raised by
new tsxes only 0 per cent. Of her war
expenditures. During the third year
she levied by additional taxes lover
and above the pre-war ieveD oniy
slightly innre then II per cent. OF her
war expenses.
n We should attempt to q rs much
In thc first year OF the war ~ Great.
Britain did IN the third year II would
suffice 10 raise by taxntion $i.c5oO00.- I
ON. II. IN order 10 nc Absolutely on
the safe siic. II seemed advisable u ,