The Chesterfield advertiser. [volume] (Chesterfield C.H., S.C.) 1884-1978, 1917-06-14
BY EDWIN r. A. SELIGMAN,

BY EDWIN r. A. SELIGMAN,
McVickar Professor of Political Econ
Omy. Columbia University.
| On May 23, 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-
nue. to be derived was estimated at ST.
, SlO,42OOUO. The amendment to the in.
! come tax, which was tackled on to the
bill during tho discussion i'm the House,
was expected to yield another $4,000.
600 or $J0,OU0,OO0.
In discussing the House bill, two
! problems arise:
l. How much should be raised by
taxation?
H. In what manner should this sum
be raised?
I. How Much Should Be Raised by
Taxation?
How was the figure Of 81. 500. .OOO. 900
arrived at? The answer is simple. When
the Secretary of the Treasury came to
estimate the additional war expenses
for the year 10l7-1S. he calculated that
they would amount to some $4,000
100000, of which $3,OO0.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 S1,SO0,O0O..
| 600.
| There are two extreme theories, each
or which may be dismissed with scant
courtesy. The one IS that all war cx-
pcnditurcs should be betrayed by loans,
| and the other Is that all war cXpcndi-
lures should be betrayed by taxes
| Each theory Is untcnable
1t il indeed true that the burdens OF
the war should he borne by the pres
cnt 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 he distributed at least over a
decade within the same generation.
In the second place, when expcndi-
lures approach the gigantic sums of
prcScnt-day 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 commune
| ty would have TO be endured But
where the disasters are so great and
at the same time so unnecessary, the
/ a In
| practicable.
| Secretary MctdoO had the right in
Stinct and highly commcndablc cour-
age in deciding that n substantial por-
tion, at least, of the revenues should
be derived from taxation. But when
he hit upon thc plan of $3.50 per cent,
that il, of raising Onchalf 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 n large OK
tent on loans at the outset OF war is
Il mistake
| Disadvantages of Excessive Taxes.
| The disadvantages OF excessive taxes
| /. Excessive taxes on consumption
will cause popular resentment.
! = Excessive taxes OH industry will
disarrangc 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.
pletc the surplus available for invest.
mcnts and Interfere with the placing OF
| the enormous lOnuS which will be ncccs
sary in any event.
| 4. Excessive taxes on wealth will
cause IA serious dimlnutlon Of the in
comes which are at present largely
drawn upon for the support OF educa-
tional and philanthropic enterprises
Moreover, these sources OF support
would be dried up precisely at the time
when the need would be greatest.
S. Excessive taxation at tho outset OF
tho war will reduce the elasticity avail
able for the increasing demands that
are soon to como.
| Great Brtain's Policy.
Take Great Britain as an example
During the first 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 8 per cent. OF her wal
expenditures. During the third year
she levied by additional taxes (oveI
and above the prc-war levcD only
slightly more than II per cent. OF hci
war.eXpcnSes.
If we should attempt to do as much
| ff nnt
Britain did in the third year 1t would
suffice to raise by taxation S1.250O00.
900. If, I'm order to he absolutely OF
the safe side. 1t seemed advisable I,
increase the sum to $iJOOOO0, 600, thi,
should. I'm our opinion. I've the maxi
mum.
In considering the apportionment OF
the extraordinary burden Of taxes in
war times certain scientific principles
| Infnjfply pStaIliShnI.