Crittenden record-press. [volume] (Marion, Ky.) 1909-191?, 1917-06-14
BY EDWIN R. A. SELIGMAN,

BY EDWIN R. A. SEliGMAN,
| McVlokar 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 OF
Ways and Means, the additional reve
nue. to be derived was estimated at ST.
$40 $4,000 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 $4,000.
O0O or S50,0o0,0O0.
In discussing the House bill two
problems arise:
|. How mach should be raised by
taxation?
II. In what manner should this sum
be raised!
l. How Much Should Be Raised by
Tasation7
How was the figure ~ SO0.0O00uO
arrived att The answer Is simple. when
the Secretary Of the Treasury came TO
estimate the additional war expenses
FOR the year l9l7ls, he calculated that
they would amount TO some s6Gro,.
OO0,0cO. OF which s3Oo0. $4,000 was to
be allotted 10 the allies. and S3Ga
O00.000 was TO be utilized for the do
nestle purposes Thinking that II
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 ,sOo,cc0,.
900.
There are two extreme theories. each
II which may be dismissed with scant
courtesy. The one Is that all war eN.
penditures should be betrayed by loans
AMI the other IS that all war expcndi
lures should be betrayed by taxes
Each theory Is untenable
Il Is indeed true that the burdens Of
the war should he borne by the pres
ent rather than the future generation;
but this does not mean that they should
be borne 10y 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 II
decade within the same generation
In the second place when c1rondi.
inres approach the gigantic sums ~
prcscnt.day warfare the tax-only pol
icy would require more than the toinl
surplus OF social income Were this
absolutely necessary. the ensuing nav.
oc In the economic life OF the communl.
~ would have to be endured Rut
where the disasters are so great and
al the same TINE 10 unnecessary, the
'Gs-only policy may I've declared I'm
Practicable
Secretary McAd0o had the right In
stlnct and highly commcninhle cour
age In deciding that substantial pur
ton. at least ~ the revenues shuuld
be derived from taxation. But when
H. hit upon the plan 81 $3.50 per cent
that Is. 81 raising one-hnlf 81 all do
nestle war expenditures 10y taxes, the
question arises whether he did not 20
100 far.
The relative proportion Of loans Ia
tnxes Is after all purely business
proposition Not TO rely TO u large cx.
tent on loans ut the outset OF war is
n mistake.
disadvantage OF Excessive Taxes
The disadvantages 81 excessive taxes
I the outset OF the war are as follows
/. Excessive taxes on consumption
will cause popular resentment
.. Excessive taxes On industry will
disarrnngc business. damp enthusiasm
and restrict the spirit of enterprise nj
the very time when The opposite is
needed.
3. Excessive taxes on incomes viii dc.
90 -" '"r.l'. -; 10 'og iavest.
is AL r;c..y. with the placing Of
"a, e.. IrAo's lonIsw.i. hw!.l he neecs'
snry In any event
4. Excessive taxes on wealth will
cause serious diminutlol u the In.
comes which are at present largely
drawn upon for the support Of educa.
tional and philanthropic enterprises
Morecvcr. these sources OF support
would be dried NJ precisely at the time
when the need would he greatest.
s. Excessive taxation at the outset Of
the war will reduce the elasticity avail.
able for the increasing demands tina,
are soon TO come.
Great Britain's Policy.
Tase Great Britain as an example
During the first year Of the war she
increased taxes only slightly, In order
10 keep Industries going AZ top notch
During the second year she raised by
new taxes only per cent ~ her war
expenditures. During the third year
she levied by additional taxes lover
and above the prc.war level only
slightly more than II per cent Of her
war expenses.
II we should attempt 20 do M much
In the first year Of the war nv Great
Britain did IN the third year II would
suffice 10 raise by taxation 81. 80 600
COO II, In order to he absolutely on
the safe side, Il seemed advisable q,
Increase the sum 20 ei,t0OO00.O0O. ihi'
should, In our opinion. be the mosl
mum
A