The Calhoun chronicle. [volume] (Grantsville, W. Va.) 1883-1984, 1917-08-30
HOW SHALL We
PAY FOR The WAR?
A Constructive Criticism on tho
House Revenue Bill.
Five Reasons Why Excessive Taxos at
the outSot of War Are Disadvantage.
ous-Great Britain Example Worthy
Of Emulatlon-hiow the Taxes Should
Be Apportionod.
BY EDWIN r. A. ssLIoMAN,

BY EDWIN r. A. sELlGMAN,
McNickar Professor Of Political Econ
ony, Columbia University.
On May %, 1917, the House OF Rep
resentatives passed al act ito provide
revenue to defray war expenses aud
for other purposes In the original
bill as presented by tho Committee OF
Ways and Means. the additional reve-
nue. to he derived was estimated ut ST..
S10,420,0O0. The amendment TO the In.
come tax, which was tackled on to tho
bill during the discussion in the House.
was expected 10 yield another $4,000
900 or $5O.OOO,O00
In discussing the House bill, two
problems arise:
l. How much should be raised by
taxation?
III. In what manner should this sum
be raised?
|. How Much Should Be Raised by
Taxation?
How was tho figure or $l.SOo,OOO, 900
arrived ut? The answer Is simple. When
the Secretary ~ the Treasury came to
estimate the additional war expenses
for the year 19l7-1S. he calculated that
they would amount 10 some $1,000
100000. OF which $3,CO0,OOOO0O was TO
be allotted 10 the allies. aud $1,000
100000 was 70 be utilized for tho 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 ratsed by taxes was 81. 5000
600.
There are two extreme theories, each
OF which may be dismissed with scant
courtesy. The one is that Rll war ex-
penditures should be betrayed by loans.
and the other ~ that Nil war eSpendl-
lures should be betrayed by taxes.
Each theory is untennble.
II is indeed true that the burdens OF
the war should be borne by tho pres.
ent rather than the future generation
but this does not mean that they should
be borne by this years taxation.
Meeting all war expenses 10y taxation
mikes the taxpayers I'm one or two
years bear the burden OF benefits that
ought to be distributed ut least over
decade within The same generation.
In the second place, when expendi-
lures approach the gigantic sums Of
present-day warfare. the tax only pol
Icy would require moro than the total
surplus Of social income. Were this
absolutely necessary. the ensuing bav-
oc ia the economic life Of tho commuui-
u would have 20 be endured. But
where the disasters ara 50 great and
at the same time so unnecessary, the
tax-Only policy may be declared i'm.
practicable
Secretary NcAdOo had the right in
sfinot and highly commendablc cour-
age iva deciding that substantial por-
ton, NJ least, ~ tho revenues should
be derived from taxation. But when
he nit upon the plan Of $3.50 per cent,
tbut Is, OF raising One-half OF all do
nestle war expenditures by taxes, the
question arises whether he did not 20
too far
The relative proportion OF loans 70
taxes IS after al purely business
proposition. Not 20 rely TO large ex-
tent OF loans 10 fhe outset ~ war Is
q mistake.
Disadvantages Of Excessive TaNsa
Tho Disadvantages 81 excessive taxes
40 the outset 81 the war are as follows.
T. Excessive taxes on consumption
WI cause popular resentment
2 Excessive taxes Ou Industry Will
disarrango business. damp enthusiasm
and restrict the spirit Or enterprise nj
the very time when the opposite f.
needed
g. Excessive taxes on incomes will de-
plete the surplus available for invest
ments and interfere win the placing OF
the enormous loans which viii be neccs.
sary ln any event
4 Excessive taxes on wealth viii
cause a serious diminutOn or ,he In
comes which are at present largely
drawn upon for fbc support Of cduca-
ti0nal and phllanthr0pic enterprises
Moreover. these sources OF support
would bc dried zap precisely at the time
when the need would be greatest
3. Excessive taxation 81 tho outset Of
ibs var will reduce tho elasticity avail
abio FOR che Increasing demands that
ere soon - CONS.