The Wrangell sentinel., 1917-07-12

On May 23. l911 the House of Rep resentatives passed an act ito provide revenue to defray war expenses and for other purposes" Ill the original bill as presented by the Committee of Ways and Means, the additional reye- nue to be derived was estimated at Sl,- S10.42o.00. 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 S40,0oo,- GOO or S50,00o GOO.
 In discussing the House bill, two problems arise:
 l. How much should be raised by taxation?
 II. In what manner should this sum be raised?
 !. How Much Should Be Raised by
 Taxation?
 How was the figure of S1,S00,000,000 arrived at? The answer is simple. When the Secretary of the Treasury came to estimate the additional War expenses for the year 1917-1S he calculated that ! they would amount to some SG.GoO.- i 100000. of which S3000, ,000,00O was to 1 be allotted to the allies. and S3.600.- 000,000 was to be utilized for the do- nestle purposes. Thinking that it would be fair proposition to divide this latter sum between loans and taxes, he concluded that the amount i to be raised by taxes was 1.S00000.- O0O
 | There are two extreme theories, each of which may be dismissed with scant courtesy. The one is that all war cx- penditures should be Gefrayed by loans. and the other is that all war eXpendi- lures should be defrayed by taxes. Each theory is untenable.
 It is indeed true that the burdens of the war should be borne by the 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 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- l lures approach the gigantic sums of 1 present-day warfare, the tax-only pol icy would require more than the total surplus of social income. Were this absolutely necessary. the ensuing hay 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 tine so unnecessary, the i taX-only policy may be declared i'm ! practicable.
 Secretary McAdoo had the right in stinct and highly commendable cour- ! age in deciding that a substantial DOT i ton. at least, of the revenues should be derived from taxation. But when he hit upon the plan of 50-50 per cent. i that is. of raising onehalf of all do- nestle war expenditures by taxes, the question arises whether he did not go too far.
 The relative proportion of loans to taxes is after all purely business proposition. Not to rely to a large eX- tent on loans at the outset of war is mistake.
 Disadvantages of Excessive Taxes.
 
 at the outset of the war are as follows:
 l. Excessive taxes on consumption will cause popular resentment.
 ?. Excessive taxes on industry will disarrange business. damp enthusiasm and restrict the spirit of enterprise at the very time when the opposite is needed.
 | 2 EycoSSjyo to voc m fpcomoc urill da. plete the surplus available for invest ments and interfere with the placing of the enormous loans which will be neces- sary in any event.
 4. Excessive taxes on wealth will cause a serious diminution of the in- comes which are at present largely drawn upon for the support of educa- tional and philanthropic enterprises. 1 Moreover. these sources of support would be dried up precisely at the time when the need would be greatest.
 5. Excessive taxation at the outset of the war will reduce the elasticity avail. able for the increasing demands that are soon to como.
 Great eritain's Policy.
 Take Great Britain as an example. During the first year of the war she increased taxes only slightly, in order to 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 by additional taxes lover and above the pre-war leveD only slightly more than IT per cent. of her war expenses.
 If we should attempt to do as much in the first year of the war as Great Britain did h the third year it would suffice to raise by taxation S1, ,0O0,- GOO. If, in order to be absolutely on the safe side, it seemed advisable to increase the sum to $1,5OO,OOO, 900, this should, in our opinion, be the maxi mum.