Western Kansas world. [volume] (WaKeeney, Kan.) 1885-current, 1917-06-21
BY EDWIN r. A. sELioMAN,


30 Apportionsd.
BY EDWIN r. A. sELioMAN,
McvIckar Professor of Political Econ
omy.- sCoiumbia University.
On May o. 1917. the House OF Rep
resentatives passed an act ito 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 reve-
nue. to be derived was estimated at ST.
81O,42O.OOO. 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 SIC. OOO.-
600 or $5O.OOO.OOO.
In discussing the House bill, two
problems arise:
1. How much should be raised by
taxation7
II. In what manner should this sum
be raised7
I. How Much Should Be Raised by
Taxation7 ,.s.
How was the figure of 81, SOC, OOO. 600
arrived att The answer Is SIMPLE When
the Secretary Of the Treasury came to
estimate the additional war expenses
for the year 1917-18, he calculated that
they would amount. to, some Sc, &C.,
100000. Of which $4,000. 600 900 was to
be allotted to the allies, and So, Co.,
100000 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
to be raised by taxes was 81 800. OOO.-
600.
There are two extreme theories, each
of which may be dismissed with scant
courtesy. The one Is that all war ex-
penditures should be betrayed by loans,
and the other Is that all war expendf-
lures should be betrayed by taxes
Each theory Ia untenable.
1t is indeed true that the burdens of
the war should be- borne by the pres
emit 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 I'm one or two
years bear the burden Of benefits that
ought to be distributed at least over a
decade within the same generation. I
In the second place, when expendi-
present-day warfare. the tax-onIy pol
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-oniy policy may be declared i'm
practicable.
Secretary McAdoo had the right in
stinct and highly commendable cour-
age In deciding that substantial por-
ton. 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-ha1f 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 a purely business
proposition. Not to rely to large ex-
tentson loans at the outset of a war is
a mistake.
Disadvantages of Excessive Taxes.
The disadvantages of excessive taxes
at the outset of the war are as follows:
1. Excessive taxes on consumption
will cause popular resentment
z. Excessive taxes ON industry will
disarrange business, damp enthusiasm
and restrict the spirit of enterprise at
the very time when the opposite is
needed.
3. Excessive taxes on incomes will de-
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 viii
cause a serious dimfnution of the IN
comes which are at present largely |
drawn upon for the. support of educa-
ttonal and philanthropic enterprises. 1
Moreover, these sources Of support |
would be dried up precisely at the. time
when the need would be greatest /
s. Excessive taxation at the outset of |
the war will reduce the elasticity avail
Ibie for the increasin0 demands that |
are soon to como. 1fz
Great 6ritain's Policy.
Take Great Britain as an example. |
During the f1rst year of the war she |
increased taxes only slightly, I'm 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 In the third year 1t would
suffice to raise by taxation 81 $50 OOO.-
600. II. In order to be absolutely on