Show HOW SHALL WE PAY FOR THE WAR A constructive criticism on house revenue bill LOANS BETTER TAXES fv five reasons why excessive taxes tax at the outset of war arc are disadvantage on Great britain example worthy of Emulation How the taxes tax should be 0 apportion apportioned dy by EDWIN R A sel get Mo protessor of political econ omy Colu university on may 23 1917 2017 the hoube of representative passed nn an net act to provide reTti rettalue lue to defray war expenses and for or other purposes in uio we original orli bill an as presented by tho the committee of way ways and means tho additional revenue to W b derived waa was estimated at ai the amendment to the tu III come tome tar tax which vr 4 tacked on to the bill during the discua la in the house was expected to buld yuld another or Xio in discussing the alouse bill two problems arise I 1 how ilow o 0 ralrh should be raised by taxation 11 II 11 in what but manner should this aum sum bo raised I 1 how now much should 0 be ald by taxation how was the figure of 1 SW arrived at the ali ewt r Is ii bimble NN ben hen the secretary of the treasury came to estimate the additional ft at expenses i for or the year 14 lio lie calculated that they would amount to somo some of which ell WW ax was to bo be allotted to the and was to be JW utilized for the do d thinking that it would bo be a air fair proposition to divide this ratter sura between loans and ho he concluded that the amount to be raised by taxes was there them are oro extreme theories carh of which tuny ate dismissed ft ith scant courtesy the one Is jat all war ex tures all should be defrayed defray eil by loans and the he other Is ii that nil all nar expends turps should I 1 alx lx defrayed by taxes cacti theory ti 1 lint untenable erable it Is indeed truo true that the burdens of th abe war should be bortle by the irea ent eaf rather than the future generation but this doca does not alean that they should be borne by ahli cars ears fixation meeting war expenses by taxation n makes the tarp aers in oe ote or two years bear the of benefits that ought to bo be nt at least over a decade mathin the san 0 generation in the second plat pine pla pin t e when expenditures approach the gigantic elent lc bums sums of present day warfare the taix ta only pol icy ley would require more thui the total surplus 0 of income were ero this absolutely necessary the havoc in n the econ economic ornic life of uio uie com commini muni ty bonu have to be nut but where the disasters tUsa stera are so great and nt at the sami time so unnecessary tiia tax only policy may be declared im int practicable ible secretary mcadoo had the right in and highly commendable cour ago in deciding that a substantial por alois at least of the revenue should bo be derived from rom taxation but when he hit bit upon tho the plan 0 of W 1 e cent that in of raising ono half of all do bostio war expenditures by hatm the question rica arties whether ho lie did not go too lobar far the fre proportion of loans to taxes Is after all a purely business I 1 ro reposition position not to rel rab to a largo large extent on loui loans at tho boutet of a war Is a mistake disadvantages of excessive taxes the of tires sive taxed taxes at the outset of tle the war are ai follows 1 excessive taxes on consumption will cause resentment resent mt mont 2 excessive taxes on industry will disarm disarra ugo business damp c and restrict tho the spirit of at the very time when the appo opposite la is needed 3 atess ire on Inc incomes mes will deplete the aurelus available aval lable for invest inac st ments and nod interfere with the placing of tho the enormous loan loans which will be beneces feces saxy in aar event 4 taxes on wraith will ivill cause a serious diminution of tha incomes comes s whish th are nt sit present largely drawn dravin the support of aduca tonal and phi ph Wor cover of support would bo be t tried up at the tina tim when the need bould be greatest 5 excessive tast atlon at the outset of the war will red ane in avail I 1 abl aali for the th increasing lic demands that or r soon tj corn came crea great policy take tako great as an example durla the first year of 0 the war sie inertia taxes only in order 1 to keep tec industries go tg at top n notch atch during the second desir sed by new only 0 per tint of her war during the third ye year r abe she by addition it 1 otar over I 1 and above albore the pm war level only alt laore than 17 perti int or of her war a i it wn wo abduli attempt to clo as much la in the first of the ne as great british dd in iba third scar it would to fralc by tIAM tiame 1 0 if it in order to be on tap bafo fe side it deemed to the kahn lu to this boud la in oar our opinion le 14 the ai 1 pio la in considering the he tipp apportionment rdo 1 the extraordinary bunion burden of taxes in to war um time certain scientific principle sciples are established establish c d how taxes tax should de as apportioned apportion d 1 1 thu the burden of taxes must be spread an so far as possible over the whole community so as to each individual to hare share in the sacrifices au ac cording to hia ills ability to pay and according to bia share in III the government 2 taxes on consumption are decew artly borno borne ty by the community at large should be Imp imposed as far as r 0 able on articles of quasi in luxury zury oathir rain than h an on chwe of 41 3 should be imposed as far as ble upon comm in III the hands of the final consumer rather than upon ilia he articles attl clea which serve as a raw material fur for further production product lou 4 tabea s upon business should be amii ua an far as possible upon net ennit rather than upon cross TOSS re IL cell ta tit 0 capital In invested vestA 5 taxis tarts upon 1 stitch bleb will be fieri be both differentiated and graduated that Is 1 there should be a distinction between earned and unia rued tl laconic incomes and there I 1 11 t it bl hi lier her rate upon the larger it Is 1 essential ho howder weer not to mako the income rate so elcess excessive he a ai to kad llad to ev evasion ailon administrative difficulties or to the more fundamental objections which have been urged abole 0 the excess profits which are due to the war nar constitute the moat most cliv lons and rca reasonable source of revenue tinting times hut but the principle upon which lluise war profit taxes are laid must be in theory and easily calculable in practice the proposed Propos td intorre tax the additional tri income conie tax os as paskil by the house runs up to a rate of X per cent thil Is a sum unheard of in tit the history of civilized society it musi ie to remembered that it m was as only after the first year of the war that great britain increased her income tai tax to tar the maximum of 31 a per cent and even now in tit the fourth 3 car of the war the income tax doel does not exceed 42 4 per cent it could easily be shown that n tax far with rates on moderate incomes sub ly less than in great britain nud and on the larger incomes f h ut as tie high would yield only slightly less than the original lr estimated in the house bill IIII it Is to be hoped that the senate ii III reduce the total rate on the highest in comes to 34 per cert or at moat to 40 per cent and that at tit the same time it will reduce the rate on the mailer n cones con es berh ed from personal or probes blonny e innings if the war continues we hall shall hav have to depend more and more upon the in come tax by imposing Im excessive rates now we are not only endangering the future but are inviting all manner of which ven even great britain has been able to escape 6 conclusion the house rouse bill contains other unda landa mental defects which may be summed up its follows 0 1 it pursues an erroneous principle in impo ing retroactive taxes PI 2 it selects an unjust just end and tit ally ae criterion for the excess profits tax 3 it proceeds to an unheard of helsby in fit the income tat tax 1 it imposes unnar unwarranted ranted burdens upon the consumption of the comma coni inn anity 5 it Is calculated to throw business into confusion by levying taxes on oil gross receipts instead of upon commodities 0 1 o it falls to male make a proper use of stamp taxes 7 it follows an system in tit iti fiat flat inte into on imports 1 it includes a multiplicity of pet pat taxes the vexatious W qs of which Is out of all proportion to the rei cemino ell ie they produce 0 0 0 0 0 the fundamental lines on which the house bill 11 should be modified are sum med tip herewith 1 luo lie amount of new taxation shoup shout be limited to or at tit the outset to 1000 to do more inore than this would be as unwise as it 1 Is illemsky to do eren be to do more than has ever been done by any civilized govern 1 mont ment in time of stress 2 the excess fronts tax based upon R sound astern ought to yield about ma 3 the income tax schedule ought to he revl revised aed 1 with ith a it lowering of the be rate k I 1 on earned incomes 1 below 0 ami anti with an analogous lowering of the rate on the higher incomes so as not to exceed W per cent 11 careful cal culat lor kitiona that an income tax of this hint would yield tome some additional 4 1 the tax on whisky hisky and to tobacco cco 0 ought tight tu to remain approximately as it U L with a yield of about COO cm these three taxes together with the stamp tat talt at von even tle low rate of the house bill and with an improved automobile to tax yield over 1 I 1250 which Is tho the st bount of money thought desirable the above program would be in it har irony with an approved system it will do away with almost all if tf the complaints complaint that are being urged urmi against the pre present ent it will noralu from taxi I the consumption of the poor it will throw a far heavies burden upon the rich but will not go to the extremes of confiscation it A will obi alato interference with business ana 1 will keep unimpaired the social productivity tit of ho the community T it will III estal lish a just lucce tucce between finans 1 taxes and 0 t ine the danger of approach ar either alier the tax only mir policy y or the loan only polley above all it will KD undisturbed dastic margin which most must bo be more and more heavily drawn upon as the war proceeds proc wl |