Iron County register. [volume] (Ironton, Iron County, Mo.) 1867-1965, 1917-06-21
HOW SHALL We
PAY FOR THE WAR?
4 AConstructive Criticism on the
House Revenue Bill.
LOANS BETTER THAN TAXES
Five Reasons Why Excessive Taxes at
the Outset Of War Arc Disadvantage. i.
ous-Great Britain Example Worthy
Of Emutation-4ow the Taxes Should
Be Apportioned.
BY EDWIN r. A. SELIGMAN,


Be Apportioned.
BY EDWIN r. A. sELlGMAN,
Ncviekar Professor CT Political Econ
orny, Columbia University.
On May %, 1917. the House of Rep,
resentatives passed I'm act ''to 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 reye-
uue to be derived was estimated at 81
kln,i2O.OO0. The amendment to the III
come tax, which was tackled on To the
bill during the discussion IN the House,
was expected to yield another $40, ,o0o.-
600 or S5O,oo0,Ooo.
In discussing the House bill, two
problems arise:
/. How much should be raised by
taxation?
H. In what manner should this sum
be raised?
!. How Much Should Ee Raised by
a<atIon!
How was the figure Of 81 800 600, ,0Do
arrived at: The answer Is simple. When
the Secretary Of the Treasury came TO
estimate the additional war expenses
for the year 19lT-iS, he calculated that
they would amount 10 some $1,000
100000, of which $3,0D0,010 900 was IL
he allotted to the allies. and $500
roO.00O was to be utilized for the do
nestle purposes. Thinking that it
would be a fair proposition to divide
this latter sum between loans and
taxes, he concluded that the amount
TO he raised by taxes was $l,S0o,0o0,
go
There are two extreme theories. each
of which may be dismissed with scanl
courtesy. The one is that all war ex
peAditures should be betrayed by loans
aud the other IL that all war eSpenGi
lures should he betrayed by taxes
Each theory is untcnable.
1t is indeed true that the burdens o
tln war should be borne by the pres
eHt rather than the future generation
but this does not mean that they shoult
b. borne by this years taxation.
Meeting all war expenses by taxation
makes the taxpayers in one or tive
years bear the burden Of benefits tha
ought to he distributed at least over ;
decade within the same generation.
In the second place, when cxpcndi
tnres approach the gigantic snnS .
present-day warfare, the tAS only poi
icy would require more than the tota
surplus of social income. Were I'M
absolutely necessary, the ensuing l!aV
oc in the economic life of the commtlii!
~ would have to be endured El
where the disasters are so great AM
ut the same time so unnecessary, tn
taX-only policy may be declared in
practicable.
Secretary McAdoo had the right IL
stinct and highly commentlnble conl
age in deciding that substantial POI
tion, at least, or the revenues shou
be derived from taxation. But whe
he hit upon the plan Of $3.50 per cent
that is, of raising onc-half Of all dt
nestle war expenditures by taxes, IN
question arises whether he did not {.
TOO far.
The relative proportion of loans
taxes Is after all purely husinet
pronosition. Not to rely to a large e'
tent on loans at the outset OF war
a mistake.
Disadvantages Of Excessive Taxes.
The disadvantages of excessive taXt
Mt the outset Of the war arc as follows
/. Excessive taxes on consumptlo
will cause popular resentment.
2. Excessive taxes on Industry wi
dlsarrange business, damp enthusias
and restrict the spirit Of enterprise
the very time when the opposite
needed.
3. Excessive taxes on incomes Will q
plete the surplus available for inves
ments and Interfere with the placing
the enormous loans which will be nece
sary in any event.
4, Excessive taxes on wealth Ww
cause a serious diminuton Of the ]
comes which are at present large
drawn upon for the support of educ
tional and philanthropic enterprise
Moreover, these sources of suppo
would be dried up precisely Mt the tin
when the need would be greatest.
8. Excessive taxation At the outset
The war will reduce the elasticity ava
able for she Increasing demands tn
are soon 70 come.
Great eritain's Policy.
Take Great Britain as All exnmp
During the first year Of the war $
Increased taxes only slightly, In ord
to keep industries going at top note
During the second year she raised
new taxes only o per cent. Of her "
expenditures. During the third &c
she levied by additional taxes (oy
and above tho prc.war lcveD Or
slightly more than II per cent. OF I
If II We should attempt to do as mu
in tho first ycaf Of the war as Grf
Britain did in the third year It wot
sufIicc'to raise by taxation $1,2O,W
O0O II, In order to be absolutely
the safe side, It seemed advisable
Increase the sum to $1,50o,O0QNO. q
should, IN our opinion, be the ma
hum. . ...4-.....