The Manchester journal. [volume] (Manchester, Vt.) 1861-current, 1917-06-14

y ous-Orest Britain Example Worth
o OF Emulation--How the Taxes Shout
S Be Apportioned.
By EDWIN n. A. sELlGMAN,
MeYickar Professor Of Political Econ
omg Columbia University.
On May % 1917. the House OF Rep
resentatiyes passed an act ito proyid,
revenue to defray war expenses anC
for other purposes" In the origina
bill as presented by the Committee Of
Ways aud Means, the additional reve
nue. TO be derived was estimated at 81.
Sl0,420.OOO 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.
coo or SJ0,00O.0JU
In discussing the House bin, two
problems arise
l. How much should be raised by
taxation?
ii. In what manner should this sum
be raised?
| FlO" muSn De HdlSeQ Dy
| Taxation7
How was the figure OF S1,SOO.OO0. 900
arrived at? The answer is simple. When
the Secretary of the Treasury came to
estimate the additional war expenses
for the year l9l7-lS he calculated that
they would amount to some $4,000.
100000, Of which S3,000000000 was to
be allotted to the allies, and $1,000.
100000 was to be utilized for the do
nestle purposes Thinking that i'll
would be fair proposition to divide
this latter sum between loans and
taxes. he concluded that the amount
to be raised by taxes was 81 10000, |
600.
There are two extreme theories, each I
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 untenable.
1t Is indeed true that the burdens Of
the war should be borne by the pres
ent rather than the future generations:
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 at least over
decade within the same generation.
n 1 Io ]
lures approach the gigantic sums of
present-day warfare, the tax-ony pol
icy would require more than the total
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
Secretary McAdoo had the right in. ,
stinct and highly commendable cour-
age In deciding that a substantial por.
flon, at least. of the revenues should
be derived from taxation. But when /,
Hl..l
hat is, of raising one-half of all do ;
nestle war expenditures by taxes. the ;,
question arises whether he did not go !,
90 far.
The relative proportion Of loans to
axes is after all purely business T
proposition, Not to rely to a large ex. ;,
ent on loans at the outset of war is
mistake.
Disadvantages Of Excessive Taxes. a
The disadvantages Of excessive taxes n
t the outset Of the war are as follows: II
]. Excessive taxes on consumption "
viii cause popular resentment b
z. Excessive taxes on industry will N
isarrange business, damp enthusiasm
nd restrict the spirit OF enterprise att
ne very time when the opposite is &,
eeded.
q. Excessive taxes on incomes will de- b,
lete the surplus available for invest M
tents and interfere with the placing of "
ne enormous loans which will be neces. rs
ary in any event. N
4. Excessive taxes on wealth will cr
ause serious diminution OF the in. m
omes which are at present largely M
rawn upon for the support of educa.
onal and philanthropic enterprises IN
borrower, these sources OF support "
ould be dried up precisely at the time
hen the need would be greatest st
s. Excessive taxation at the outset Of 81
70 war will reduce the e astieity avail. 70
'le for the increasing demands th.tl m
. soon TO come. ~
Great eritain's Policy.
Take Great Britain as an example -,
uring the first year of the war she 70,
creased taxes only slightly, In order az
keep industries going at top notch az
nring the second year she raised BY IN
w taxes only per cent. Of her war M
penditures. During the third year I
e levied by additional taxes lover mn
d above the pre-war level only OF,
ghtly more than II per cent. OF her via
lr expenses. wtl
4 we should attempt to do as much du,
the first year Of the war a. Great i
ttain did In the third year 1t would tw,
nee to raise by taxation &l.250, 900, sue
J. II In order to be abaolufsiv nm aft,