Mineral Point tribune. (Mineral Point, Wis.) 1869-1938, 1917-07-12
BY EDWIN r. A. sELleMAN,
McVickar Professor Of Political Econ
omy. Columbia University.

hcNick9r Professor OF Political Econ.
omy. Columbia University.
On May %, 1917, the House OF Rep
resentatlves passed an act 80 provide
revenue to defray war expenses and
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 81.
100000 The amendment 20 the In.
come tax, which was tackled on to the
bin during the discussion in the House,
was expected to yield another $4,000.
900 or S500O0000
In discussing the House BILL two
problems arise.
l. How much should be raised by
taxation?
H. In what manner should this sum
be raised?
!. How Much Should Be Raised by
Taxstion7
How was the figure OF 81 100000, 600
arrived ati The answer Is simple. When
the Secretary OF tho Treasury came to
estimate the additional war expenses
=
they would amount to some $4,000.
100000, OF which $4,000. 100000 was to
be allotted TO the allies, and $4,000
| 100000 was to be utilized for the do.
| nestle purposes. Thinking that It
would be fair proposition to divide
this latter sum between loans and
/ taxes, he concluded that the amount
to be raised by taxes wns S1,SO0,00O,.
| 900.
! There are two extreme theories, each
| of which may be dismissed with scant
! courtesy. The one 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 untenablc
! 1t is indeed true that the burdens OF
| tho war should be borne by the pros.
ent rather than the future generation;
but this does not mean that they shoul,l
be borne by this years taxation
Meeting all war expenses by taxat!oa
makes the taxpayers In one or Two
years bear the burden OF benefits thot
ought 10 be distributed at least over
decade within the same generation. /
/ In the second place, when expenW.
lures approach the gigantic sums Of
prescnt-dny warfare, the tax-only POI
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 commuui-
/ " would have TO be endured. But
! whore 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 couv-
| age IN deciding that a substantial por-
1 ton, at least, of the revenues should
be derived from taxation But when
/ he hit upon the plan of $3.50 per cent,
/ that is, of raising one-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 after all purely business
! proposition. Not 10 rely to a large oS-
tent on loans at the outset OF war is
/ a mistake
| Disadvantages OF Excessive Taxes.
! The disadvantages Of excessive taXtS
at the outset of the war are as follows,
/ l. Excessive taxes on consumption
/ win cause popular resentment
/ . Excessive taxes ON industry VIII
/ disarraugo business, damp enthusiasm
ana restrict the spirit OF enterprise Mt
the very time when the opposite IS
/ needed.
/ 3. Excessive taxes ON incomes win de
! pletc the surplus available for invest.
ments and interfere with the placing OF
/ the enormous loans which will beneceS
sary in any event
/ T. Excessive taxes ON wealth Will
cause serious diminutiou OF the in.
comes which are at present largely
drawn upon for the support OF eduoa.
tlonGl and philUuthroF,c enterprises
| Moreover these sources Of support
would Ice dried up precisely at the time
when the need would ho Erentcst
/ s. Excessive taxation at the outset OF
/ the war will reduce the elasticity avail
able for the Increasing demands that
/ are soon 20 come.
Great ertsjn's Policy.
4 Take Great Britain as an example
/ During the first year OF the war she
increased taxes only slightly. I'll order
20 keep industries going NJ top notch
I During the second year she raised by
new taxes only per cent. OF her war
/ expenditures During the third year
she levied by additional taxes lover
aud above the prc-war lcycO only
slightly more than IL per cent. Of her
war expenses
II we should attempt 10 do as much
,n the first year of the war as Great
/ Rataiu did IN the thirl year II would
suffice % rails, Is taxation Sl,2JOolo,-
600 ~ iu order d "a absolutely an
thc sage side. il seemed advisable In
increase tha rm 10 Sl5oooooo0o. thls
sha3 BE- ou- opinion rs the maxi
MAN