St. Johns review. (Saint Johns, Or.) 1904-current, 1917-07-27

the Outset OF War Are Disadvantage.
ous--Great Britain Example Worthy
Of Emulation-tow the Taxes Should
Be ApPortioned.
BY EDWIN r. A. sELIGMAN,
Mcvickar Professor Of Political Econ
omy Columbia University
Ga May %. 1917, the House of Rep
rescntntiyes passed an act ito provide
revenue to defray war expenses and
for other purposes" In the original
bill us presented 10y the Committee OF
Ways and Mems the additional reve.
o. nuc TO be derived was estimated at 81.
$40 10000 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.
900 or SjO,OOOOOO.
In discussing the House bill, two
problems arise.
l. How much should be raised by
tlxationy
H. In what manner should this sum
be ruiscdy
!. How Much Should Be Raised by
Tasation7
How was the figure of 81 800. 200. 900
arrived nt? The nnswcr IN simple. When
the Secretary OF the Treasury came 20
estimate the additional war expenses
for the year iOlT.iS, he calculated that
they would amount ~ some $1,000.
OOnoOD, uf which S3,OOOOOOOOO was 10
bc allotted To the allies. aud S3GOO,.
100000 was to bc utilized for the do.
mcstic purposes. Thinking that II
would bc fair proposition 10 divide
this latter sum between loans and
taxes. he concluded that the amount
60 be- raised by taxes was 81 10000.
no
There are two extreme theories. each
OF which may bo dismissed with scant
courtesy The one n that all war cx
pendiurcs should be- betrayed by loans,
aud the other II that all war eKpcndi
lures should be betrayed by taxes
Each theory In untcnablc.
II is indeed true that the burdens OF
the war should he borne by the pres.
cut 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 bc distributed at least over u
decade within the same generation.
In the second place, when cNpcndi'
lures approach the gigantic sums OF
prcscnt-day warfare the taI only pol
hey would require more than the total
surplus of social income. Were this
absolutely necessary, the ensuing hny.
oc In the economic life of the communl-
~ would have 10 be endured. Hut
whore the disasters are so great and |
NJ the same time ~ unnecessary, the
tnA A-only policy may be- declared i'm
practicable.
Secretary McAdOO had the right In /
stinct aud highly commeudnble cour
age In deciding that substantial por
tion, az least. of the revenues should
be- derived from taxation But wheq
he hit upon the plan Of 60-jO per cent,
that is. of raising One.half OF all do
mcstic war expenditures by taxes, the
question arises whether he did not &c
too fur.
The relative proportion of loans TO
taxes Is after all purely business
proposition. Not 10 rely To n large eX-
tent uu loans al the outset of war IN
u mistake
Disadvantages Of Excessive Taxes.
The disadvantages ~ excessive taxes
at the outset ~ the war are as follows:
/. Excessive taxes un consumption
will cause popular resentment.
= Excessive taxes On industry will /
dlsarrange business, damp enthusiasm
AMI restrict the spirit of enterprise at |
the very time when the opposite Is |
needed
2. Excessive taxes on incomes viii de
plcir the surplus available for invest
meuts aud interfere with the placing OF
the enormous loans which viii be neces-
sary in any event.
I. Excessive taxes ON wealth will
cause a serious diminution OF the in.
comes which are al present largely /
drawn upon for the support of educa-
tional and philanthropic enterprises.
Moreover, these sources OF support
"NNtN w VIZ NNA w nv ioAAA Ut AhN AAiAt
when the need would be greatest
5. Excessive taxation al the outset Of
tho war will reduce the elasticity avail
able Tor the increasing demands that
are soon 10 come.
Great 6ritain's Policy,
Take Great Britain as an example,
During the first year OF the war she
Increased taxes only slightly. In order
10 keep industries going at top notch.
During the second year she raised by
new taxes only per cent. OF her war
expenditures, During the third year
she levied 10y additional taxes (oyer
anu above the pre.war leyeD only
slightly more than II per cent, OF her
war expenses.
II we should attempt 20 do as much
In the first year OF the war as Great
Britain did in the third wear il would
suffice 10 raise by taxation Sl,250,OOo.-
900 H. IA order 20 be absolutely on
the safe side II seemed advisable TO
increase the suri 10 81 100000. 600. this
should, In our opinion, be the maii-
mum