Evening star., 1934-01-07
BY PROF. E. L.. A. SELIGMAN.

BY PROF. E. L.. A. SELIGMAN.
TN CONSIDERING the fiscal tasks
that confront Congress, and leav-
ing to one side the monetary and
i industrial problems, We may ask:
What bounds are to be set to the
burdens of taxation? What justifica-
ton is there for pushing the public
debt to the war limits? What is the
connection between recovery and the
national finances?
1t seems unnecessary TO sound the
warning of excessive taxation; the en-
tire country resounds with complaints.
In indirect levies, overtaxation Of pro-
duction spells the slowing down Of
business, with its inevitable repercus-
sions on wages. Overtaxation Of con-
sumption falls most heavily on those
least able to pay, and lowers purchasing
power.
Many Interests Hurt.
In direct imposts the perils are no
less evident Too high an income tax
reduces the incentive to enterprise and
lessons the flow Of private benefactions
to education and philanthropy. Too
high a property tax increases the diff
ficulties of the andowner-whether
small farmer or city dweller-in meet
ing his fixed obligations in the face
of reduced income Excessive taxation
imperils the interests of many outside
the immediate taxpayers.
II Is sometimes contended that these
dangers are illusory. Attention has
been called to England. which seems
to endure with equanimity considerably
higher tax rates than in the United
States 1t must be remembered, how
ever, that the English system Is IN
many ways different from that in the
United States. They have, indeed, a
higher income tax, but they have no
antiquated property tax. They have
higher liquor, tobacco and stamp taxes,
but they have no sales tax, no taxes
on production and virtually no taxes
on business. In American municipal,
State and Federal finance, the danger
signals have long been set.
War Advance Different.
How then can the taxpayers meet the
imperious demands of the public Treas
ury, demands so greatly swollen by the
needs of recovery? In all fiscal sys-
TENS we must distinguish between cur
rent and emergency expenditures. The
chief emergency is that Of war War
outlays may be met in part by war
taxes, because Of the rapidly rising
price level which Is always their con-
comitant and which. to that extent,
eases the pressure. The remaining gap
can be filled either by the issue of fiat
money-most disastrous Of expedients
and in the end the most crushing OF
burdens-or by the use Of public credit.
Hence the great war debts Of modern
times.
But there are emergencies Of peace as
well as of war. Such emergencies, typi-
fed by the cyclical depressions, are
sometimes even more fateful, partly
because the depression itself dries up
the sources of revenues, partly because
the burden of taxation is augmented
by falling prices rather than eaSed by
rising prices. There Is thus all the
more justification for resort to public
credit as In the American crises OF
1887, 1857 and 1898.
The prodigious expenditures OF the
present, which are responsible for the
rapid mounting Of the debt are OF
three kinds On one hand we find the
productive or -liquidating loans like
those to the banks and railroads. Al
the other end we have the large sums
devoted to the relief of the starving
In between we have the great bulk ol
outlays for public works-roads, slum