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HOW SHALL WE PAY FOR THE WAD? A Constructs Criticism on the House Revenue 6i!i. LOANS BETTER THAN TAXES Five Reasons Why Excessive Taxes at the Outset of War Are Disadvantage ous—Great Britain Example Worthy of Emulation—How the Taxes Should Be Apportioned. By EDWIN R. A. SELIGMAN, McVickar Profeseor of Political Kcon omy, Columbia University. On May 23, 1017, lhe House of Rep resentatives passed uti uct "to provide revenue to defray war expenses and for other purposes.'' lu the original hill ns presented by tlie Committee of Ways and .Means, the additional reve nue to lie derived was estimated at sl,- 810,420,000. The amendment to the in come tax. which was Incited on to the bill during the discussion in the House, was expected to yield another $40,000,- 000 or 8T,0,000,000. In discussing the House hill, two problems arise: I. How much should he raised by taxation ? 11. lu what manner should this sum be raisedV I. How Much Should Be Raided by T axaiion ? How was the figure «.f $1,800,000,0 s» arrived at ? The answer in simple. When the Secretary of the Treasure nine to estimate the additional xpemn i for the year 1017-hS, he cub-uni.-si that they would amount to Dome $0.(10 i. 000,000, of which $3,000,01 HY.uliO was In be allotted to the all*c and $2,000, 000,000 was to lie utilised for the do mestie purposes Thin',in that It would be a fair proposition in divide this latter stun between loam; and taxes, he concluded that the amount to ho raised by taxes wan ," 1,!: >0,000,- 000. There are two extreme them h t, each of which may be dlsmis d wiih scant courtesy. The one is that all war ex penditures should he defrayed I y loans, and the other is that all war expendi tures should he defrayed by tuxes Each theory is untenable It Is indeed true that the burdens of the war should be borne by the pres ent rather limit the future generation: hut this does not mean that they should he borne by this year's taxation. Meeting all war expenses by taxation makes the taxpayers In one or two years bear the burden of benefits that ought to he distributed at least over n decade within (ho same generation. In the second place, when expendi tures approach the gigantic sums of present-day warfare, the tax-only pol icy would require more (bun (in' total surplus of social Income. Were this absolutely necessary, the ensuing hav oc in the economic life of the communi ty would have to be endured, But where the disasters are so s eat and at the same lime so unnece; ary, the tax-only policy may be declared im practicable. Secretary McAdoo had the right in stinct and highly commendable cour age in deciding that a substantial por tion, at least, of the revenues should be derived from taxation. But when he hit upon the plan of 50-50 per cent., that is, of raising one-half of all do mestic war expenditures by taxes, the question arises whether ho did not go too far. Tlie relative proportion of loans to taxes Is after all a purely business proposition. Not to rely to a large ex tent on loaus at the outset of a war is a mistake. Disadvantages of Excessive Taxes. The disadvantages of excessive taxes at the outset of the war are us follows: 1. Excessive taxes on consumption will cause popular resentment. 2. Excessive taxes on industry will disarrange business, damp enthusiasm and restrict the spirit of enterprise at the very time when the opposite Is needed. 3. Excessive taxes on incomes will de plete the surplus available for invest meats and Interfere with the placing of the enormous loans which will be neces sary in any event. 4. Excessive taxes on wealtli will cause a serious diminution of (he In comes which are at present largely drawn upon for the support of cduca tlounl and philanthropic enterprises Moreover, these sources of support would be dried up precisely at the time when the need would lie greatest. 5. Excessive taxation at the outset of the war will reduce the elasticity avail able for the increasing demands that are soon to come. Great Britain’s Policy. Take Great Britain as an example. During the tirst year of the war she Increased taxes only slightly, in order to keep industries going at top notch. During the second year she raised by new taxes only 9 per cent, of her war expenditures. During the third year she levied by additional taxes (over and above tbe pre-war level) only slightly more than 17 per cent, of her war expenses. If we should attempt to do as much In the first year of the war ns Great Britain did in the third year It would suffice to raise by taxation $1,250,000.- 000. If, in order to be absolutely on the safe side, it seemed advisable U> Increase the sum to $1,600,000,000, this should. In our opinion, be the maxi mum. Ic considering the apportionment of the extraordinary burden of taxes in war times certain scientific principles are definitely established: How Taxes Should Ba Apportioned. il) The burden of taxes must bo spread as far as possible over the whole community so as to cause each individual to share in the sacrifices ac cording to his ability to pay and ac cording to his share in the Government. (2) Taxes on consumption, which are necessarily borne by the community at large, should be Imposed as far as pos sible on articles of quasi-luxury rather than on those of necessity. (3) Excises should he imposed as far as possible upon commodities in the hands of the (Inal consumer rather than upon tlie serve pri marily as raw MwTuil for further production. (4) Taxes upon business should be imposed as far upon net earnings gross re ceipts or capita™# Sled (5) Taxes upon income which will necessarily be sucre should be both differentiated aiflkraduated. That is there should he JP distinction between earned and unearned incomes and there should be a higher rate upon the larger Incomes. It is essential, however, not to make the income rate so excessive as to lead to evasion, administrative difficulties, or to the more fundamental objections which have been urged above. (0) The excess profits which are due to the war constitute the most'obvious and reasonable source of revenue dur ing war times. But the principle upon which these war-profit taxes are laid must ho equitable iu theory and easily calculable in practice. The Proposed Incoms Tax. The additional income tax as passed by (he Hom e runs up to a rate of <lO per cent. This Is a sum unheard of in the history of civilized society. It must be remembered that It was only after the first year of (he war that Great Britain Increased her Income tax to the maximum of 34 per cent., and that even now In the fourth year of the war the Income tax does not exceed 42'/ 2 per cent. It could easily he shown thnt a tax with rates on moderate incomes sub sfinitially less than in Great Britain, and on the larger Incomes about a-- hlgh, would yield only slightly less than the $532,000,-000 originally estimated in the House bill. It is to be hoped that the Senate will reduce tlie total ruto on the highest in comes to 34 per cent, or at most to 40 per cent, and that at the same time it will reduce the rate on the smaller in comes derived from personal or profes sional earnings. If the war continues we shall have to depend more and more upon tha in come tax. By imposing excessive rates now wo aro not only endangering the future, but aro inviting all manner of difficulties which even Great Britain has been able to escapo. Conclusion. The House bill contains otliet funds mental defects which muy bo summed up as follows: (!) It pursues an erroneous principle in imposing retroactive taxes. (2) It selects an unjust and unwork able criterion for the excess-profits tux. (3) It proceeds to an unheard-of height in income lax. ( I) It imposes unwarranted burdens upon the consumption of the commu nity. (5) II is calculated to throw business into confusion by levying taxes on gross receipts instead of upon commodities. (0) It fails to make a proper use of stamp taxes. (7> It follows an unscientific system In ils flat rate on imports. (S) It Includes a multiplicity of pet ty and unlucrative taxes, the vexatious ness of which is out of all proportion to the revenue they produce. »•»•«»• The fundamental lines on which the House bill should be modified are sum med up herewith: (1) The amount of new taxation should be limited to $1,250,000,000 —or at the outset to $1,500,000,000. To do more than this would be ns unwise as it is unnecessary. To do even this would be to do more than has ever been done by any civilized Govern ment in time of stress. (2) The excess-profits tax based upon a sound system ought to yield about $500,000,000*, (3) The ljttame tax schedule ought to he revised Fith n lowering of the rates on earned incomes below SIO,OOO, and with an aj-jlogous lowering of the rates on t&S&Jlier incomes, so as not to exceed ftjppor cent. A careful cal culation shows that an income tax of this kind w aid yield some $450,000.- 000 additicj^. (4i The whisky and tobacco ought to remain approximately as it is. with a yield of about $230,000,000. These three taxes, together with the stamp t: x at even the low rate of the House bill, and with an Improved au tomobile tax, will yield over $1,250,- 000.000, which is the amount of money thought desirable. The above program would be in liar mony with an approved scientific sys tem. It will do away with almost all of tlie complaints that are being urged against the present. It will refrain from taxing the consumption of the poor. It will throw a far heavier burden upon tlie rich, but will not go to the extremes of confiscation. It will ob viate interference with business and will keep unimpaired the social pro ductivity of the community. It will establish a just balance be tween loaus and taxes and will not succumb tit the danger of approaching either the tax-only policy or the loan only policy. Above all. it will keep an undisturbed elastic margin, which must be more and more heavily drawn upon as the war proceeds. PEARSON TRIRENE, JUNE 15,1917 Repair Work a Specialty BWISII TO INFORM THE PUBLIC THAT I HAVE PROCURED THE AGENCY DORT CARS, WHICH ARE THE BEST CAR ON THE MARKET FOR THE PRICE, $780.00 DELIVERED IN PEARSON. Tires, Tubes, tic iu SI;:) Firelnsurance The Best Way Is to (ake you -• Shoos lo Marlin's shoe Shoo before 1 !n \ wear too loll;' Thirty Miles io the next Shop. Located iu Adams (in rage Building, look for sign J. S. Martin, Pearson, (la. The Macon Daily Telegraph l ays for Itself and Saves Toil Money Besides Read Its Ads every day and you will save money on your purchases. Read Its News Columns :unl you will k< op po :rd ;i ■ io whal the world is doing and will I litis bo able U> exriei ■ belter judgement in pour business affairs. Send $7.00 for Daily and Sunday or SS.OC for Daily only. \ ou may In losing money because you are not inform It is economy to subscribe to THE TELEGRAPH, macon,. georgi* A, R. Harrelson HORSESHOEIK6 A BLACKSMITH «.« SPECIALTY GUARANTEE!! * WHEELRIGHT * SHOP STAYS OPEN THE YEAR ROUND SaipSH CLASS Wqr GROCERIES i .Columbia's Apron. ft, Filled at w9our Store OBDEP\\. Tl M&W* TODAY S ; B he groceries sold at this 'store. The delicate aroma of the coffee, the de licit s tac-te of the butter— all the appetizing points of good sweet—clean food are carefully preserved at this store. Give us a trial. THE PEARSON GROCERY COMPANY HAMILTON’S GARAGE Let Us Demonstrate this Sar To You Why put off protecting yourself i against fire loss. Sec me, or phone I and I'll see you and we esn fix it j uuiek. W. C. PATTERSON. Agent New Arrivals We have just received and opened up the following Summer Goods Palm Beach Suits, Ladies’ Hats, Panama Straw Hats. We Have a New Line of Slippers We are the Agent for Strauss Tailoring Co Inspect these goods and get prices H. L. LANKFORD S 2 Excursion Fares VIA. G. S. & F. Ry. Account of the following Special Occasions, li. S. N. F. Ry. will sell teduced round trip fares from coupon stat ion. Athena, Ga. Account Summer School, Universi ty of (la. Dates of Sale June JO. July 1,2, 3. !)„ 10, I<>, 17 and 30th, Return limit fifteen. Atlanta, Ga. Aeeount National Baptist Sunday School and B. Y. P. L.. (Colored) Dates of sale June 4 and 5, limit June ISth. !!)17. Atlanta. Ga. Aeeount Int. Ass. of Rotary Clubs. Dates of sale. June 15. Hi and 17. limit June 25th. HH 7. Knoxville, Tenn. Account Summer School of the Smith. Dates of sale June Hi. 17, 18, 23, 24. July 1, 7 and 14, limit fifteen days. Louisville. Ky. Account American Library Assn. Dates of sale. June 19, 20 and 21, limit J one 40th, 1917. Nashville. Tenn Account Twelth Annual Session Sunday School Congress, ((Adored * Dates of sale, June 11. 12 and 13th, limit June 21st, 1917. Nashvillk Ten n Peabody College Summer School. Dates of sale June 11, 12, 13, 14, 21, 22, July 20, 21 and 20th, limit fifteen days. Black Moutain and Ridgcrkst, N. C: Numerous Special occasions, during May. June. July and August. Dates of sale and limits upon application. The above excursion fares arc oi>en to the public. Excursion fares also on sale to Mountain and Seashore resorts. For complete information as to fares and schedules call on any ticket agent, <i. S. it F. Ry.. or address J. W. JAMISON, T.P.A. or C. B. RHODES, G.P.A. MACON, GEORGIA Atlantic, Birmingham & Atlanta R. R. ESTABLISHES 35 WAYCROSS-ATLANTA SLEEPING CAR SERVICE «£ Effective March 21st, 1917 NORTHBOUND SOUTHBOUND Number 3 Number 4 Leave Way cross 7:30 p. m. Leave Atlanta 11:00 p. m. “ Douglas 9:10 p. m. Arrive Fitzgearid...l:l2 a. ni, “ Fitzgearld 1:25 p m. “ Douglas 7:15 a. m. Arrive Atlanta 6:00 a. m. “ Way cross 9:99 a. m. ’ ] Making connection at Atlanta with all morning trains of al lines, North, East and West. W. W. CROXTON, G. P. A., A. B. A A. RY., Adapts, Ga Fire proof Building Satisfaction G uaranteed