New-York tribune., 1918-06-09

cd of dealing with the matter which
IS far more satisfactory than the
taxation of producers or of dealers.
Neither class would have valid
ground for complaint, since, owing to
the curtailment of production Of lux
uries which is an unavoidable conse-
sequence of the war, stocks Of such
goods are certain to appreciate iu
value.
Four Billions Could
Thus Be Added
From these various sources S4,.
0OO,O00,000 of additional revenue can
be derived without the slightest dam
ger Of retarding war industrial ac-
tivities. On the contrary, the mobili-
cation of the economic power of the
country would be positively stimu-
leted. 1t is also a reasonable as
sumption that the savings available
for subscriptions to Liberty bonds
would not be reduced by anything
like the amount of the additional
revenue derived from the taxes. In
deed, it is not at all improbable that
there would be a positive increase in
the total as result of a diminution
of wasteful extravaganza induced by
the luxury taxes.
Taxation, if properly devised,
might be made to provide all the
funds required for the war. Public
opinion is apparently not prepared
for so drastic course and adequate
administrative machinery is lacking.
Much more than half the funds
needed for the next twelve months of
the war will be borrowed. Will there
be sufficient increase in savings to
enable us to escape the evils of fur
ther credit imitation? 1t does not
seem probable, if we continue to rely
entirely upon voluntary action stim-
ulated only by the interest rate on
government bonds.
Each Liberty bond campaign is
followed by drop in the price Of
bonds. This is an inevitable conse-
quence Of subscriptions far in excess
of actual savings. Each successive
future bond issue will therefore pre-
sumably involve an advance in the
interest rate unless savings make a
; closer approach to the amount which
the government must borrow.
An Involuntary
, Economy Bond
One possible means of inducing
adequate savings may be mentioned.
In New Zealand income tax payers
are required to subscribe a certain
percentage of their income to gov
ernment bonds. A more elastic ar
rangenlent would doubtless prove
, more satisfactory to taxpayers and
so permit a more rigorous applica-
tion of this method of securing funds.
This could be accomplished by inn
posing further tax of 10 per cent
, in addition to whatever regular rates
, Of income tax may be carried in the
, new revenue measure. Taxpayers
might then be allowed the option Of
paying the additional tax or of buy
ing three or four times the amount Of
, the tax in bonds. These bonds, which
q might be called economy bonds, would
III many respects be quite unlike Lib
erty bonds. They would be regis
tered and non-transferable until one
year after the close of the war; they
would be ineligible as a basis for
rediscounts at Federal Reserve
Y banks, and all bankers would be
{ urged, as patriotic duty, not to
: grant loans to facilitate their pur-
e chase. Further, in order to gain ex-
: eraption from the extra tax, the tax
Z payer would be required to state in
!. his income tax return that he had
. purchased his quota Of economy
e bonds from savings ard from no
other source; and that his holdings
$ Of securities and other property were
! the same, or the equivalent in value
Y Of those which he owned at the be-
r ginning Of the previous year. The
adoption Of an arrangement Of this
: kind would furnish the individual
0 citizen with a powerful motive for
a economy and would set free much
s labor and materials for war uses. 1,
= would also diminish materially the
extent to which the further expan
n sion of credit will be required ts
i finance the war, and so enable us t.
, escape the burdens attendant upor
Rxvv%hnu H.