New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-05-26
War Tax Changes

the House of Representatives passed nave
publicly admitted that their work was
crude and hasty. They had no clean-cut
programme They started out with the
idea of raising about $1,000, 100000. But
when Secretary McAdoo made the belated
suggestion that S2,20000000O should be
raised the House managers clapped on
new taxation carrying the total up to
about 1850, 100000.
Mr.. McAdoo vastly overrated the need
of new taxation. SO did the Ways and
Means Committee. The fundamental mis-
take made so far has been in trying to
throw too large a share of the cost of the
war on the generation which is going to
fight il. This war is a war for the safe
guarding of democracy and the assurance
of world peace in the years to come. 1t IS
proper that the next generation should
nav its fair share for the achievement OF
these purposes.
We made the mistake in the Civil War
of overissuing bonds and sighting taxa
ton. Secretary Chases happy idea OF CIV
ing government bonds an artificial value
bv allowing the banks to use them as
basis for note circulation made 1t tempt
ingly easy for the Treasury to borrow
money 1t is wise to impose now greater
sacrifices in the way of taxation than were
imposed during the Civil War. But ra-
tional mean should be established between
current taxation and the use of long
term credit.
In our opinion the new taxes ought not
TO be expected to raise more than sl,2OO,-
OOO. 900 annually. If it is necessary, after
six months or a year. to increase the pro-
norton of taxes to borrowings, the tax
schedules can be revised upward. When
we get adjusted to the war and see better
what it means our people will be ready to
make larger sacrifices. But excessive taxa
ton at the start unnecessarily deranges
business and chills ardor. 1t also defeats
the ends which the government has IN
view. The public will not absorb bond
issues readily if it feels that it is being
overtaxed. Undoubtedly most Of the diff
fculty encountered in floating the Liberty
Loan has been due to tactless talk at
Washington about the necessity of increas-
ing taxation at one stroke by from two
billions to two billions and a quarter.
The Senate Finance Committee is on
the right track. II has better concep-
ton of the balance which ought to be main
tanned between taxation and bond issues
than the Ways and Means Committee had.
This better understanding of the situa-
ton will make fer far more satisfactory
tax law-one which will not demoralize
business and will not check the free use Of
the governments borrowing power.
The Senate committee has already aban-
doned the most vicious single feature OF
the House measure. That was the retro
active tax levied on incomes for the calen-
dar year 1916. 1t is dangerous abuse
OF the taxing power to collect retroactive
duties or excises--taXes on income which
has been spent or on goods which have
been sold and consumed. 1t would be just
as equitable 20 ask importers to pay In
October. 1917, q third of the duties which
they paid on goods brought into this coun-
try in 1916, or TO collect from tobacco
manufacturers next fall one-third of the
sums which they paid last year as internal
revenue taxes on cigars and cigarettes, as
il would be TO demand from income tax
payers third of amounts for which they
were assessed on their incomes last year
This principle, once applied, has no limi-
tations. II would permit Congress to du
plicate taxes paid in the last ten years or
in the last twenty years. Taxation under
il would become fantastic form of
confscation.
The Senate committee has also modi-
fed the excess profits tax section of the
House bill so as TO make it bear more
equally on corporations and affect war
profits more exclusively. This is sub
stantial improvement. Another great i'm
provement could be made by modifying the
10 per cent horizontal increase in tariff
duties and the 10 per cent fiat duty i'm
posed on articles now on the free list. 1t
is preposterous 10 put tariff duties on ar
ticles of food 0uxuries like tea and coffe,
Of course, excepted) when the country is
being frightened by predictions of famine
and Congress is being asked TO create a
food dictatorship in order to regulate food
production and consumption. 1t is the
same with raw materials imported for use
in manufacturing war supplies. A tax on
them, coming into the Treasury, would
merely have 10 be paid out again in the
higher cost Of the supplies when they are
produced or purchased by the government.
One change which the Finance Commit
tee has in view is, in our judgment, mad
visible. That is the excision Of the House
second class postage rates paragraph. The
Finance Committee holds that the House
increases in postal charges. involving also