New-York tribune., 1918-07-21

very limited resource for the financ-
ing Of a war of the present dimen-
sions. Progressively with the gov
eminent pressure for funds and the
crumbling Of prices in the stock
exchanges, alternative investments
offer more and more effective
competition. AS soon as bonds have
to be marketed by appeals to pa
triotism rather than as a good in
vestment or by the coercion of pub
lie opinion, the principle Of taxation
has been accepted and actually ap-
piled.
Congress is therefore wise In
placing greatly increased emphasis
on taxes-unwise in having allowed
indirect taxation to become so far
unavailable through the price infla-
tions of the past year-unwise also
in leaving room for further dis
turbances Of prices to stand in the
way Of the later employment Of in
direct taxation. Indirect taxes
ought, however, to be an extremely
important fiscal resource. A con-
sistently wise tax programme is i'm
possible only in the degree that in
f1ation methods are avoided.
Under the present policy, there
fore, taxation must in the main rely
en- income and profits levies. Profits
taxes are, indeed, made especially
imperative in the degree that prices
have been made to advance or al
lowed to advance. At the best, no
doubt, war carries with it a disturb
ance in relative prices through radi-
cal redistribution in the demands
for goods-some prices rising and
others falling-but there is no need
that prices in general advance. Some
room, therefore, must have re-
mained for profits taxes. 1t is mon
strous that any one should be al
lowed to get rich out of the general
disaster and to increase the burdens
of the rest by getting rich.
The Only Palliative
OF Price Imitation
The general advance in prices
has, however, enormously exag-
gerated the volume Of these private
gains to the degree that war profits
are now running at somewhere be-
tween eight and twelve billions of
dollars. The widening margin be-
tween costs-especially wage and
salary costs-and sale prices is, in
truth, precisely the method by which
the masses in America have been
made to share in the burdens of
the war-as somehow share they
must if the war is to go on. This
method of rising prices falls short
of a rational tax programme only
by the fact that not the govern
ment but business has done the col
lecting. Profits taxes are the only
palliative of price infation-the
more imperative the more the fiscal
policy has been allowed to drift into
the fallacies and blunders of infla-
ton finance
1t is, no doubt, true that profits
taxes must react somewhat to limit
the amount of income taxes
that may be collected, precisely
as it is true that bond fiota-
tions must interfere with taxes
and taxes with bond issues. If
we get these profits by taxes the
profits will not be there to buv
bonds with. But no one dollar can
be had twice, anyway. The only
source of revenue being the current
national income in products, so
much of this product as is taken by
one method cannot be had bv
another. The same bushel of wheat
or pound of iron can serve the war
need, or any other need, only once.
1t is of the very essence of wise
finance that we get these war profits
without promising to return them
later with interest.
Poor Have Borne
A Heavy Burden
But it must be held in mind that
the income and profits taxes of this
year are collected on the basis of
the individual and corporate gains
of last year. The same taxes of
next year will be based on the re-
ceipts Of this year. Thus it is not
final against heavy customs and ex-
else taxes that prices have been ris-