Pierre weekly free press. (Pierre, S.D.) 1889-19??, 1917-06-28
HOW ! SHALL We
P'AYFO The WAR?
/ Constructive Criticism on the
HOUSE Revenue Bill.
LOANS BETTER THAN TAXES
Five Reasons Why Excessive Taxes at
the Outset Of War Are Disadvantage
ous-Great Britain Example Worthy
q Emulation-How the Taxes Should
30 Apportioned.
BY EDWIN r. A. sELlamAN,

20 Apportioned.
BY EDWIN r. A. sELiGMAM,
Ncvickar Professor Of Political Econ
orny. Columbia University.
On May %, 1917, the House of Rep.
resentatives passed an 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-
U to be derived was estimated at ST.
010,42O,OO0. The amendment to the in
come tax, which was tackled on to the
bill during the discussion in the House,
was expected to yield another $4,000
600 or $5O,O00,OO0.
In discussing the House bill, two
problems arise:
/. How much should be raised by
taxation?
II. In what manner should this sum
be Yaised2
!. How Much Should Be Raised by
Taxation?
How was the figure of $1,000, 100000
arrived at? The answer Is simple. When
the Secretary Of the Treasury came to
estimate the additional war expenses
FOR the year 1917-1S, he calculated that
they would amount to some $4,000.
100000. of which $1,000, 100000 was to
be allotted to the allies, and $1,000.
100000 was to be utilized for the do
nestle purposes. Thinking that 1t
would be q fair proposition to divide
this latter sum between loans and
taxes, he concluded that the amount
to be raised by taxes was ST. 100000
600.
There are two extreme theories, each
OF which may be dismissed with scant
courtesy. The N is that all war cx-
peIditures should be 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 of
the war should be borne by the pres
emit rather than the future generation;
but this does not mean that they should
be borne by this ycar's 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 same generation.
In the second place, when expendl-
lures approach the gigantic sums OF
present-day warfare, the tax-only pol
Icy would require more than the total
N surplus OF sOcial income. Were this
absolutely necessary, the ensuing hav-
oc in the economic life of the communi-
" would have to be endured. But
where the disasters are so great and
ut the same time so unnecessary, the
tax-only policy may be declared Inn
practicable.
Secretary McAdoo had the right in
etinct and highly ~commendable cour-
. age In deciding that d substantial por-
ton, at least, OF the revenues should
BE- derived from taxation. But when
he hit upon the plan OF 5000 per cent,
that is, OF raising oue-half 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 fafter MI purely business
neOpositions Not to rely to a large ex-
Int on loans ct the outset OF a wal is
mistake.
Disadvantages Of Excessive Taxes.
The disadvantages Of excessive taxes
ats theSoutset OF the war are MS follows:
Excessive taxes N consumption
Ntll cause popular resentment.
aHff8 49, NJ ~ rGEnFrf