Review of the Book:
American Taxation: Its History
as a Social Force in Democracy
by Sidney Ratner
Harry Gunnison Brown
[Reprinted from the American Economic Review,
Vol. 32, No. 3, Part 1 (September, 1942), pp. 602-604.
Mr. Ratner's book was published in New York by Norton]
There seems to be, as a general rule, an opposition between scholarly
writing, and the more popular writing of the professional journalist.
The one, aiming at exactitude, full of qualifications (lest perchance
a review by another scholar note the absence of reference to some
exceptional case or to some occasional modifying circumstance!) and
documented with numerous footnotes, is often drudgery to read. The
other, though it may hold the reader's attention, is likely not to be
documented at all and is sometimes inaccurate, almost necessarily
incomplete (because of lack of space, if for no other reason), and
probably more often misleading than the work of the trained scholar.
But Mr. Ratner's study is at the same time scholarly and interesting.
The author has a happy faculty of selection of dramatic incidents and
striking quotations without neglect of what is truly significant.
Although Mr. Ratner's book is, as its subtitle indicates, a history
of American taxation, it is by no means confined to the facts and
figures on taxation. On the contrary, it is shot through with
references to conflicting interests, opinions, and sentiments and with
considerable description and comment on the influence of pressure
groups. There is comment, too, on the inconsistencies between or among
various pronouncements of the Supreme Court on the income tax and
related topics and comment on the pre-membership background and point
of view of one and another member of the court.
The author has taken pains to make mention of the writings and
pronouncements of many economists whose views are given in the text or
whose contributions to the literature of taxation are cited in
footnotes. Especial mention has been made of the economists on the
matter of financing war. Referring to the problem of financing World
War I, the author says:
Such noted economists as Professors 0. M. W. Sprague of
Harvard, Irving Fisher of Yale, and E. Dana Durand of Minnesota
urged Congress to finance the war, enormously costly though it was,
mainly, if not entirely, from taxes collected during its progress.
Their argument was that government reliance on loans would lead to
an inflation of credit, a general and rapid rise in prices, an
increase in the money costs of the war, a reduction in the real
income of the masses, extraordinary profits for a few, and
consequent social discontent. To avert these evils and the danger of
revolutionary class antagonism, they advocated that the conscription
of men should logically and equitably be accompanied by something in
the nature of the conscription of current income above that of the
pre-war income and that portion of it not needed for absolutely
necessary consumption. They favored high progressive income taxes,
practically confiscatory of incomes above $100,000. Similar views
were given wide currency through the American Committee on War
Finance, headed by Amos Pinchot, in its "pay-as-you-go"
war campaign. This program was criticized by Professors E. R. A.
Seligman and R. M. Haig of Columbia, C. J. Bullock of Harvard, and
others as being too extreme, but they agreed that a long-time policy
of increasingly heavy taxation, coupled judiciously with loans, was
desirable. A large number of distinguished economists in sympathy
with the heavy taxation program sent a memorial to Congress setting
forth its advantages as against the bad effects of relying too
strongly upon bond issues.
And in his final chapter, "America Faces the Second World War,"
mention is made of the proposals for war financing of J. M. Keynes,
Gerhard Colm, Alvin H. Hansen, and others.
Attention is devoted throughout, and at length, to the influence on
federal taxation and other financial measures, not only of our various
wars, but also of the rise and fall of political parties and
coalitions and of the dominating administrative and legislative
leaders of each period. Typical chapter headings are "Jacksonian
Democracy and Manifest Destiny," "The Populist Revolt,"
"The Tariff, and the Income Tax," "Pressure Politics
and Tax Issues," "Theodore Roosevelt and the Progressive
Movement," "Republican Insurgency and Taxation," and "Wilsonian
Liberalism and Tax Reform."
Very little attention is given to taxation policy and practice in the
separate states. The author has confined his discussion almost
altogether to federal taxation. The faults of the general property tax
(unless there is implied criticism of this or some other tax or taxes
in his sympathetic comments on Henry George), the growing reliance on
sales taxes by a large number of our state governments, the increasing
use of gasoline taxes, and other matters concerning the financial and
tax policies of the separate states, are ignored. This is perhaps as
it should be, for the addition of such material with anything like the
fullness of presentation given the history of federal taxation would
require at least one other equally large volume. A carping critic
might indeed contend that the title leads one to expect a broader
treatment in this regard, but, after all, a title should be brief and
intriguing. It is not essential that it be fully descriptive.
Certain trends in federal taxation are especially emphasized. As the
author himself states in his Preface, his presentation "centers
on those movements which brought into existence the federal income,
inheritance, estate, gift and excess profits taxes," and he has
given quite a bit of attention to "their chief rival, the
Mr. Ratner does not try to conceal either his dislike for the tariff
or his satisfaction at the trend toward the adoption and extension of
the other types of taxation just mentioned. Probably his book is all
the more interesting on this account. The coldly dispassionate
balancing of one argument against another with no effort to evaluate
them and with the studied attempt to appear always "meticulously
objective" is perhaps not likely to appeal to a majority of
readers. But possibly if the author had included in his study the
trend of state taxation in the last decade or two toward very great
reliance on sales taxes and toward increasing barriers to interstate
trade, which are the kinds of thing he clearly does not like when
practiced by the federal government, the tone of his book would have
been a few shades less optimistic!
Although, as this reviewer has already noted, the points of view of
various professional economists-and others-on the objectives of
taxation and how these objectives may be best realized are given some
attention, the author gives no extended theoretical argument for or
against any of them. No doubt a very few careful and patient readers,
unfamiliar with theoretical analyses of the shifting, ultimate
incidence and various repressive or other effects of different types
of taxes and tax systems, would be aided in their interpretation of
the significance of the historical facts, were such analyses included.
But books of too great size are forbidding. So, to many readers, is
such theoretical analysis. Certainly, an author is entitled to choose
his own limits of subject matter, on the basis of his own especial
interests and the nature of his own researches.
Mr. Ratner's book is obviously, as his publishers say it is, the
result of years of scholarly research. It contains a wealth of
historical information. Its numerous footnote references and its
extensive bibliography should be greatly helpful to anyone who may
wish to pursue the investigation on any particular point or points
still further, and it is easy to read.