The daily star-mirror. (Moscow, Idaho) 1911-1939, 1917-07-02


Of EmuIation-How the Taxes Shout
Be Apportionsd.
BY EDWIN r. A. SELicMAN,
Mcyiclzar Professor of Political Econ
omy. Columbia University.
On May %, 1917, the House Of Rep
resentatives passed an act Ito provid,
revenue to defray war expenses ant
for other purposes. In the origina
bill as presented by the Committee Of
Ways and Means, the additional reve
nue. 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 $40, OOO,-
| 900 or $5O,OOO,OOO.
In discussing the House bill, two
problems arise:
|. How much should be raised by
taxation?
II. In what manner should this sum
be raised?
I. How Much Should b Raised by
Taxationf
How was the figure Of 81 100000 900
arrived at? The answer is simple. When
the Secretary Of the Treasury came to
estimate the additional war expenses
for the year 1918. he calculated that
they would amount to some $6,6OO,-
100000, of which $3,OOO,OOO 900 was to
be allotted to the allies, and $1,000
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 81 300, Co.,
900.
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 expendi-
lures should be betrayed by taxes.
Each theory is untenable
1t is indeed true that the burdens of
The war should be borne by the pres
INT rather than the future generation:
,ut this does not mean that they should
De borne by Ahis years taxation.
Meeting all war expenses by taxation
makes the taxpayers in one or two
ears bear the burden Of benefits that |
ught to be distributed at least over a
ecade within the same generation. I
In the second place, when e1pendi- ,
ures approach the gigantic sums OF
resent-day warfare, the ta1-only pol
y would require more than the total
lrplus of social income. Were this 8
bsolutely necessary. the ensuing hay
: In the economic life Of the commune h
: would have to be endured But
here the disasters arc SO great and U
the same time 50 unnecessary, the n
x-only policy may be declared I'm
'acticable. il
Secretary McAdOo had the right in r.
met and highly commendable cOur-
e in deciding that substantial por- 81
IN. at least Of the revenues should
derived from taxation But when ir
hit upon the plan OF $3.50 per cent,
at Is. Of raising one-half OF all do ty
estic war expenditures by taxes, the NJ
eStfOn arises whether he did not 90 th
, far.
rhe relative proportion of loans to
res is after all purely business II
oposition. Not to rely to large e1- m
1t on loans at the outset of a war is
mistake. sh
Of Excessive Taxes. at
he disadvantages OF excessive taxes N
the outset Of the war are as follows IL
Excessive taxes on consumption W.
| cause popular resentment. be
Excessive taxes on industry will m'
arrange business, damp enthusiasm
restrict the spirit Of enterprise at
very time when the opposite Is $5'
ded.
Excessive taxes on incomes WI de- De
Z the surplus available for invest on
ITS and interfere with the placing Of WI
enormous loans which will be neces- rat
Y in any event. to
Excessive taxes on wealth will cul
Sc a serious diminution Of the IN TIL
les which are at present largely OO
wn upon for the support of educa 4
al and philanthropic enterprises. ous
cover. these sources OF s,,nnopt wit
I'D be dried up precisely at the time I
N the need would be greatest sta
Excessive taxation at tho outset of no
war will reduce. the elasticity avail ton
for the increasing demands that 600
soon to come. tho
Great Britain's Policy. T
Ike Great Britain as an example MOI
ing the first year of the war SHE TEN
eased taxes only slightly, in order OF
eep industries going at top notch aga
ing the second year she raised by froI
taxes only per cent. of her war poo
mixtures. During the third year IL
levied by additional taxes (ovei upo
above the pre-waf Level only extr
tly more than II per cent Of hci Wat
expenses. VIII
wa should atte,ntt r, III az ,nu.h duct
lie first year of the war as Great
lin did in the third year it would t"es
e to raise by taxation $1,250OOO.- Succ
II, In order to be absolutely on eiln'
safe side, it seemed advisable to only
ase the sum to 81 900, 100000, this undi
ID. in our opinion. be the maxi NUS
upon