Deming graphic. (Deming, N.M.) 1903-1948, 1918-05-03
now SHALL We
PAY FOR THE WARE
4 Constructive Criticism On he
House Revenue Bin.
-
LOANS BETTER THAN TAXES

IUhNO ULtIIu HMM INA6O
Five Reasons Why Excessive Taxes a
the Outset Of War Are plsadvansans.
ous--orsst Britain Example Worthy
Of Emulatlon-dow the Taxes Should
% APportlonod.
BY EDWIN n, A. eELloMAN,
Mcvickar Professor Of Political Econ.
omy, Columbia University.
On May %. 1917, the House Of Rep
eesentatives passed an act ITO provide
evenue 70 defray war expenses and
Tor other purposes" In the originai
bill as presented by the Committee Of
Ways and Means, the additional reve
aue to be derived was estimated at 81,
sl0,420OOO. The amendment to the IN
come tax, which was tackled on to the
bill during che discussion In the House
was expected to yield another $4,000.
900 or S50OOO,OOO.
In discussing the House bill, tvs
problems arise:
!. How much should be raised b.
taxationY
II. In what manner should this sun
30 raisedG
How Much Should aO Raised b
TaHation7
How was the figure Of 81 10000, 900
arrived atG The answer Is simple. When
The Secretary Of the Treasury came e
estimate the additional war expense.
for the year i9l7.ls. he calculated that
they would amount to some $0,0O0,.
OOO,G00 Of which 5000 10000 was e
be allotted to the allies, and $500,
100000 was TO be utilized for the do
nestle purposes, Thinking that Il
would be a fair proposition to divide
this latter sum between loans and
taxes, he concluded that the amount
to be raised by taxes was Sl.eOOOOO.
900.
There are two extreme theories, each
Of which may be dismissed with scani
courtesy The one Is that all war ex.
penditures should be betrayed BY loans
and the other Is that all war expendi
lures should be betrayed by taxes
Each theory Is untenable.
It is indeed true that the burdens Of
the war should be borne BY the pres
ent 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 thai
ought to be distributed at least over O
decade within the same generation.
In the second place. when expendl
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 communal
~ would have to be endured. But
where the disasters are so great and
at the same time so unnecessary the
tax-only policy may be declared i'm
practicable
Secretary McAdoo had the right In.
stinct and highly cOmmendable cOur
age In deciding that a substantial pOr
ton, at least, Of the revenues should
be derived from taxation. But when
he hit upon the plan OF $3.50 per cent,
that is, Of raising onc.half Of all do
nestle war expenditures by taxes, the
question arises whether he did not 60
too far.
The relative proportion OF loans 70
taxes Is after all q purely business
proposition. Not to rely to q large ex.
tent on loans at the outset Of q war e
a mistake.
Disadvantages Of Excessive Taxes
The Disadvantages Of excessive taxes
at the outset Of the war are a. follows.
1. Excessive taxes on consumption
WI cause popular resentment.
2. Excessive taxes ON industry will
disarrange business. damp enthusiasm
and restrict the spirit Of enterprise al
the very time when the opposite l.
needed
3. Excessive taxes ON incomes viii de
plete the surplus available for invest
ments aud interfere with the placing Of
the enormous Lans which will be naces
sary 10 any event.
4 Excessive taxes on wealth viii
cause a serious diminutiOn OF the IN.
comes which are at present largely
drawn upon for the support Of educa-
n0nal 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 e tho outsst 81
the war will reduce the elasticity avail.
sbis for che Increasing demands that
aro soon 20 come
Great erltain's Policy.
Take Great Britain as en- example.
During the 6rst year Of the war che
increased taxes only allghtly, IN order
70 Keen industries going AZ ton notch