Lincoln County times. (Jerome, Idaho) 1911-1919, 1917-06-21
BY EDWIN r. A. sELIoMAN,


Be Apportionsd.
BY EDWIN r. A. SELlGMAN,
AcVickar Professor OF Political Econ
omy. Columbia University
On May %, 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 or
Ways and Means the additional reve
nue. " be derived was estimated AT 81,
Sl0,42O.OOO The amendment to the IN
come tax, which was tackled on to the
bill during the discussion ia the House.
was expected 10 yield another SIO,OOO
900 or S5O,OOO,Oo0.
In discussing the House bill. two
problems arise:
l. How much should be raised by
ta1ationi
be raisedi
!. How Much Should Be Raised by
Tasaton2
How was the figure Of 81 5000 OOO
arrived att 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 $4,000
100000 OF which $1,000 100000 was to
be allotted to the allies. and $1,000
10000 was TO he 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
10 be raised by taxes was 81 10000.
600
There are two extreme theories, each
or which may be dismissed with scant
courtesy. The one Is that all war ex-
penditures should be betrayed 10y loans
and the other is that all war expendi-
lures should be betrayed 10y taxes
Each theory is untenable.
II Is Indeed true that the burdens OF
the war should he borne 10y the pres
ent rather than the future generations
but this does not mean that they should
be borne by this years taxation
Meeting all war expenses 10y taxation
makes the taxpayers IN one or two
years bear the burden OF benefits that
ought 10 be distributed at least over
decade within the same generation
In the second place. when expendi-
lures approach the gigantic sums Of
present-day warfare the tax-only pol
Icy would require more than the total
surplus of social income Were this
absolutely necessary. the ensuing hav-
&C IN the economic life OF the communi-
| ~ would have 10 he endured But
where the disasters are so great and
al the same time so unnecessary. the
tax-Only policy may he declared i'm
practicable.
Secretary McAdoo had the right in
stinct and highly commendahle cour-
age In deciding that substantial por-
tion. at least. Of the revenues should
he derived from taxation. But when
he hit upon the plan OF 1880 per cent
that is, OF raising one-half of all do
nestle war expenditures by taxes. the
question arises whether he did not 60
too far.
The relative proportion OF loans to
taxes IL after all "A purely business
proposition. Not to rely TO large eN-
tent GU loans at the outset Of II war Is
a mistake.
DISADVANTAGES OF Excessive Taxes.
The disadvantages Of excessive taxes
at the outset OF the war are nS follows:
/. Excessive taxes on consumption
will cause popular resentment
/ EyfaAsiXa industry, will
disarrange business. damp enthusiasm
and restrict the spirit OF enterprise nj
the very time when the opposite *
needed
g. Excessive taxes on incomes will dc
plete the surplus available for invest.
ments and Interfere with the placing of
the enormous loans which will Ice neccs
sary In any event.
| 4. Excessive taxes Oh wealth will
cause serious diminution of the in
comes which are at present largely
drawn upon for the support OF educa-
tional and philanthroplc enterprises
Moreover, these sources of support
would be dried mp precisely AT the time
when the need would be greatest
|
the war will reduce the elasticity avail
able for the Increasing demands that
| are soon to CONS.
Great Britain'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 10y
new taxes only o per cent of her war
expenditures. During the third year
she levied by additional taxes lover
| and above the pre-war leven only
slightly more than II per cent. of her
war expenses.
III we should attempt TO do as much
In the first year of the war as Great
Britain did in the third year II would
suffice to raise by taxation S1.250. 0n0.-
900. II. IN order to be absolutely on
the safe side. It seemed advisable to
| increase the sum to $l.500.000. 600 this
should. in our opinion. be the maxi
mum.