The Weston leader. [volume] (Weston, Umatilla County, Or.) 189?-1946, 1917-07-06
ey EDWIN r. A. sELIoMAN,

Be Apportioned.
BY EDWIN r. A. sELlGMAN,
Mcvickar Professor OF Political Econ
omy, Columbia University,
on May -. 1917. the House OF Rep
reSentatives passed an act ito provide
revenue TO dcfray war expenses and
FOR other purposes" In the original
bill as presented by the Committee Of
Ways and Means, the additional reve
uue to be derived was estimated at 81.
SIC. 10000. The amendment TO the In
come tax. which was tackled on TO the
bin during the discussion in the House,
was expected TO yield another $4,000
COO or $5oyO00,O0o.
In discussing the House bill, two
problems arise:
|. How much should be raised by
taxation?
II. In what manner should this sum
be raised?
!. How Much Should Be Raised by
Taxation9
How was the figure Of 81, 500, ,000, 600
arrived at? The answer Is simple. When
the Secretary Of the Treasury came to
estimate the additional war expenses
for the year 191T.1S, he calculated that
they would amount to some $G,6O0,-
000,O00, OF which $3,000. 10000 was to
be allotted to the allies, and $780,
10000 was to be utilized for the do
nestic purposes. Thinking that it
would be fair proposition to divide
this latter sum between loans and
taxes, he concluded that the amount
10 be raised by taxes was 81 $4,000.
O00.
There are two extreme theories, each
Of which may be dismissed with scant
courtesy The one is that all war ex-
pcuditures should be betrayed by loans,
and the other Is that all war ezpendi-
lures should be betrayed by taxes.
Each theory is untenablc.
IL is indeed true that the burdens OF
illa war should be borne by the pres.
eut rather than the future generation;
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 a
decade within the same generation.
In the second place, when expendi-
lures approach the gigantic sums OF
presentday warfare, the tax-only 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 communi.
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
practicable.
Secretary McAdoo had the right in.
stinct and highly commendable cour-
age in deciding that substantial por-
tion, 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 60
too far.
The relative proportion of loans to
taxes is after all a purely business
proposition. Not to rely to a large ex-
tent on loans at the outset Of war Is
a mistake
Disadvantages Of Excessive Taxes.
The disadvantages Of excessive taxes
at the outset Of the war are as follows:
/. Excessive taxes on consumption
viii cause popular resentment.
2. Excessive taxes OH industry will
iisarrange business, damp enthusiasm
and restrict the spirit of enterprise at =
the very time when the opposite is
Ieeded.
8. Excessive taxes on incomes will de-
,lete the surplus available for invest
nents and interfere with the placing Of
be enormous loans which viii be neces- =
airy In any event. :
4. Excessive taxes on wealth will y
ause serious diminution Of the in - -
ONES which are at present largely
avn upon for the support Of educa- !,
ional and philanthropic enterprises. =
forever, these sources of support
'ould be driei up precisely at the time -.
hen the need would be greatest Z, Z,
s. Excessive taxation at the outset Of a.
,e war will reduce the elasticity avail. NJ
Bile for the increasing demands that ~ ~
q soon TO come. th
Great Britain's Policy.
Take Great Britain as an example. n
uring the first year of the war she 'I
creased taxes only slightly. In order ol
keep industries going at top notch az
Iring the second year she raised by F'
W taxes only o per cent of her war po
penditures During the third year
e levied by additional taxes (over up
d above the pre-war leyeD only eA
ghtly more than II per cent Of her va
r expenses WI
( we should attempt to do as much du
the first year OF the war as Great
tain did In the third year 1t would wv
ice TO raise by taxation S1,2J0O00,- SUE
. If. I'm order TO be absolutely on eitl
safe side, il seemed advisable TO ohi
rease the sum TO $l,JO0,OO0OO0. this an
uld, in our opinion, be the maxi mu
upC