Newspaper Page Text
U. S. WILL RUSH
I.OOMOO MEN $5,000,000,000 More Is Ask ed of Congress. HUGE ARMY .FOR ACROSS SEA Billion More May Be Raised from In come and Excess Profit Tax—New Army Drafts Will Be Made—First Million Men to Come from 500,000 Drafted, National Guard and Regu lars. WASHINGTON An American army of 1,000,000 men for service abroad at once, instead of the 500,000 contemplated for the first draft, is foreshadowed by the government’s re quest for an additional $5,000,000,000 made to the senate finance committee. The first million mt n are to be made up of the first draft army of 500,000, the national guard and the regulars. It is improbable that the first draft will be increased, but the government is arranging its finances for other drafts without the necessity of going to congress again for money. Additional $2,000,000 to Allies. Secretary McAdoo, committee mem bers stated, told the finance commit tee it was estimated that an addition al credit of $2,000,000,000 to be loan ed to the allies also would be request ed. In addition to the war and navy esti mates, members of the senate appro priations committee said the shipping board had already submitted esti mates for additional appropriations of $500,000,000. For the board $800,000,- 000 already has been authorized. Estimates for revenues in the war tax bill provide only for the first 500,- 000 men for eight months beginning July 1. The new estimates are design ed to provide for the first army of a half million for an entire year, and, in addition, for twelve months’ expendi tures caused by the second call of 500,000 men, because it would be nec essary to buy their equipment before or soon after they are drafted. In addition to the war department’s additional estimates, the navy depart ment is preparing estimates calling for $100,000,000 additional.. Billion More in Taxes. It was learned unofficially that one plan under consideration is a raise by taxation of a billion dollars more than the bill now provides and to authorize the government to make anew loan of %2. 500,000,000. Whether the loan would be in the form of new bonds or short terms cer tificates has not been determined nor has the rate of interest. The new taxes probably will be raised from excess profits, estates and income taxes. Future of Bill in Doubt. Until the war and navy estimates are complete it is impossible to say when the greatest revenue raising measure ever considered by the gov ernment will go forward. After hearing Secretary McAdoo, the committee agreed to hold up the bill until the new war estimates are received. Official figures are said to show that excess profits in the United States are now at the rate of $5,000,000,000 a year. BLOOD AND IRON TO RULE THE RUSSIANS Kerensky Declares Situatiou at Front Needs Strong Hand. PETROGRAD “A blood and iron policy” will be put into effect, if needed, to save Russia, by the gov ernment of Premier Kenensky, to which unlimited power has been granted. In an interview the premier said: ‘‘Relying upon the confidence of the masses and the army, the govern ment will save Russia and Russian unity by blood and iron if argument and reason, honor and conscience are not sufficient. ‘‘The situation at the front is very serious and demands heroic measures. But I am convinced the organism of the state is sufficiently vigorous to be cured without a partial amputation.” Carries Maps; Arrested. ATCHISON, KAN. Federal of- ! ficials are shadowing a man giving the } name of Eric Tedd, who was arrested } at Huion with maps of Fort Riley an/ ! Fort Leavenworth in his possession. ! Makes Cavalry Artillery. WASHINGTON, D. C. Eight new ! regiments of cavalry, equipped -rd trained as artillery, vQ U- gccK • :o the regular army as quickly as they can be organized. ■ *4 PARIS lt is ordered tha henceforth no names of American of fleers except Major General Perth ny ’ and Major General Sibert be mention-' ed in news dispatches. EDWIN N. HURLEY Chicagoan Is Namecf as Head of Shipping Board. f M m I m M '■■■/.■ ' v f :%rv. #■ Photo by American Press Association. MANN BLOCKS FOOD BILL IN CONGRESS President May Veto Measure That Will Be Sent Him. v WASHINGTON, D. C. Administra tion leaders in the house failed in their effort to have the food control bill sent to conference so that sec tion providing for a committee of con gress to supervise the conduct of the war might be eliminated as demanded by the President. Republicans under the leadership of Mr. Mann blocked the request made by Representative Lever to whom the President sent his letter expressing his irrevocable opposition to such ‘‘legislative interference” with his ad ministration. They are preparing to renew their fight to delay this section in the bill when it is brought up again in the house. They claim they will be able to secure a majority on a vote to instruct the house conferees to stand by the senate amendment which pro vided ft>r the war committee. The fate of the food bill may be said to be in the hands of those who insist upon having such a committee ap pointed. In the senate there were fifty three members including fifteen Dem ocrats who supported the amendment. If the house takes similar action the bill will surely be vetoed by the Pres ident. INSURANCE FOR SOLDIERS Policies of SI,OOO to SIO,OOO at Usual Rate to Be Provided. WASHINGTON, D. C. Tentative plans evolved at the conference of government officials and insurance men provide for the issuance of in surance in amounts from SI,OOO to SIO,OOO upon the lives of American sailors and soldiers at ordinary pre mium rates, with the government pay ing the excess charge because of the extra risk of military service. Family allowances to dependents al so are proposed, the amount to depend upon the size of the family. In addi tion indemnities would be given for total or partial disability. The tenta tive program provides that the war risk insurance bureau have full charge of administering the plan. DAY WAR COST IS $33,975,000 Bonar Law Forecasts to Commons That Budget Will Be Exceeded. LONDON, ENG. Andrew Bonar Law, the chancellor of the exchequer, announced in the house of commons that for 112 days the average British expenditure has been £6,795,000 ($33,- 975,000) daily. The chancellor said the total advances made by Great Bri tain to her allies and her dominions have been £1,025,000,000. It is obvious, he said, that the bud get estimate must be exceeded. He said he would not be surprised if by the end of the financial year the ex cess was approximately the same as that of the last financial year. Purdue Star Is Drowned. LAFAYETTE, IND. Billy Wil liamson, aged twenty, star center and forward on the Purdue university backetball team last season, drowned in the Wabash river here. Wi lliamson, with several other Purdue athletes, was in swimming at a ing beach conducted by Theodore Paulson, swimming and wrestling coach at Purdue. The body has not been recovered. Advance on 155 Mile Front. BERLIN German forces in Galicia are advancing from the River Sereth to the wooded Carpathians, over a front 155 miles wide, says the official statement by the German army headquarters staff. HOW SHALL WE PAY FOR THE WAR? A Constructive Criticism on the House Revenue Bill. 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 Professor of Political Econ omy, Columbia University. On May 23, 1917, the House of Rep resentatives passed afl act “to provide revenue to defray war expenses and for other purposes.” In the original bill as presented by the Committee of Ways and Means, the additional reve nue to be derived was estimated at sl,- 810,420,000. The amendment 4o the in come tax, which was tacked on to the bill during the discussion in the House, was expected to yield another $40,000,- 000 or $50,000,000. In discussing tbo House bill, two problems arise: I. How much should be raised by taxation? 11. In wbat manner should this sum be raised? 1. How Much Should Be Raised by Taxation? How was the figure of $1,800,000,000 arrived at? The answer is simple. When the Secretary of the Treasury came to estimate the additional war expenses for the year 1917-18, he calculated that they would amount to some $6,600,- 000,000, of which $3,000,000,000 was to be allotted to the allies, and §3,600, 000,000 was to be utilized for the do mestic purposes. Thinking that it 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 $1,800,000.- 000. There are two extreme theories, each of which may be dismissed with scant courtesy. The one is that all war ex penditures should be defrayed by loans, and the other is that all war expendi tures should be defrayed 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 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 be distributed at least over a decade within the 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 than the 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 great and at the same time so unnecessary, 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 he did not go too far. The relative proportion of loans to taxes is after all a purely business proposition. Not to rely to a large ex tent on loans 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 as 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 ments and interfere with the placing of the enormous loans which will be neces sary in any event. 4. Excessive taxes on wealth will cause a serious diminution of the in comes which are at present largely drawn upon for the support of educa tional and philanthropic enterprises. Moreover, these sources of support would be dried up precisely at the time when the need would be 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 first year of the war she increased taxes only slightly, in order t> keep industries going at top notch. • Ing the second year she raised by taxes only 9 per cent, of her war expenditures. During the third year she levied by additional taxes (over and above the pre-war level) only slightly more than 17 per cent, of her war expo: v-s If we - a: tempt to do as much in the f of the war as Great Britain ■ 'he third year it would suffice to by taxation $1,250,000,- 000 If. i;; order to be absolutely on the safe side, it seemed advisable tG increase the sum to $1,500,000,000, this should, in our opinion, be the maxi mum. In considering the apportionment of the extraordinary burden of taxes in war times certain scientific principles are definitely established: How Taxes Should Be Apportioned. (1) The burden of tases must b# 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 p< sibie on articles of quasi-luxury rath, than on those of necessity. (3> Excises should be imposed as far as possible upon commodities in the hands of the final consumer rather than upon the articles which serve pri marily as raw material for further production. (4i Taxes upon business should be imposed as far as possible upon net earnings rather than upon gross re ceipts or capital invested. (5) Taxes upon income which will necessarily be severe should be both differentiated and graduated. That is there should be a 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. (6) The excess profits which are due to the war constitute the most obvior. - and reasonable source of revenue din ing war times. But the principle upon which these war-profit taxes are laid must be equitable in theory and easily calculable in practice. The Proposed Income Tax. The additional income tax as passed by the House runs up to a rate of CO 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 the war that Great Britain increased her income tax to the maximum of 34 per cent., and tha! even now in the fourth year of the war the income tax does not exceed 42% per cent. - - 1 - *****- - _ s It could easily be shown that a taiT with rates on moderate incomes sub stantially less than in Great Britain, and on the larger 'incomes about as high, 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 the total rate 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 profe.- sional earnings. If the war continue* we shall have to depend more and more upon the in come tax. By imposing excessive rates now we are not only endangering the future, but are inviting all manner of difficulties which even Great Britain has been able to escape. Conclusion. The House bill contains other funda mental defects which may be summed up as follows: (1) It pursues an erroneous principle in imposing retroactive taxes. (2) It selects an unjust and unwork able criterion for the excess-profits tax. (3) It proceeds to an unheard-of height in the income tax. (4) It imposes unwarranted burdens upon the consumption of the commu nity. (5) It is calculated to throw business into confusion by levying taxes on gros receipts instead of upon commodities. (6) It fails to make a proper use of stamp taxes. (7) It follows an unscientific system in its flat rate on imports. (8) 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—0r at the outset to $1,500,000,000. To do more than this would be as 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 income-tax schedule ought to be revised with a lowering of the rates on earned incomes below SIO,CKX), and with an analogous lowering of the fates on the higher incomes, so as not to exceed 34 per cent. A careful cal dilation shows that an income tax of this kind would yield some $450,000.- 000 additional. (4) The tax on 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 tax 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 har mony with an approved scientific sys tern. It Mill do away with almost all of the 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 the rich, but will not go to the extremes of confiscation. It will oh viate interference with business and” will keep unimpaired the social pro iluctivity of the community. It will establish a just balance be tween loans and taxes and will not succumb to 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. Here’s The Point Don’t make the mistake of thinking anything is good enough for your barn. Use Sherwin-Williams Commonwealth Bam Red a Real Paint. It covers well —and lasts. It halts depreciation. It spreads easily under the brush, and a little of it goes a long way. Sold by A L. N. Pomeroy Cos. Phone No. 257 THE ESKIMO Builds His Home for a Season— You Build Yours for a Lifetime A snow house that is built for only a season need not be built very carefully. But you who build for permanent needs should insist on using Building Materials That Last Longest and thus be relieved the cost of frequent repairs. No matter what kind of a building you are going to erect, we can save you money on the material, besides being able to offer many many helpful suggestions. Come in and be convinced. SCHALLER - YOUNG LUMBER COMPANY Phone No. 6 Hartzell Cherries for Canning ORDER FROM US NOW. Fresh Peaches, Plums, Cantalope, Cali fornia Cherries, Watermelons, Oranges CANNING SUPPLIES Rubbers, Fruit Jars, Jar Covers, Jelly- Glasses, Parawax, Vinegar, Spices Edgerton Bakery Bread is Fine. We Have it For Sale. Dill Pickles at 15c per dozen. Bring Us Your Eggs for Cash or For Trade. THE CITY GROCERY Phone 93 Pyre & Wanamaker, Props. We present an unusual showing of cool, comfy SUMMER GARMENTS Charmingly pretty are the garments which we are showing for the coming hot days, and rarely have been able to present such values. The styles are the latest. The colors are beautiful. The making is the best. All moderately priced. Linen Dresses $11.50 to $16.50 Linen Suits $12.50 to $15.00 Novelty Voiles $ 6.00 to $12.50 Sport Skirts $ 3.50 to $20.00 Purchase Now While the Assortment is good. Simpson Garment Store JANESVILLE, WISCONSIN.