ABSTRACT
This total gives a margin of £60 millions over the estimated expenditure of £750 millions, which appears ample, and it may prove that the yield of the reformed Income Tax has been under-estimated. It is difficult to reckon what revenue any given change in the Income Tax would produce, because there are no statistics of the incomes between any points except for the Super Tax class, i.e. the incomes above £3,000 a year. Elsewhere {Common Sense, April 13th, 1918), I have tried to calculate what proportion of the national income falls to the various classes by taking the allowances on incomes between £130 and £700 a year. But the results thus obtained were so absurd that it seemed better to take some assumed figure for the total income and to divide it among various classes by guess-work. Perhaps one may divide it thus, putting the total income at £3,205 millions:
In this calculation the supposed war-
income of £3,600 millions is reduced by £395 millions, it being assumed that no private employer working in competition can afford to spend money so lavishly as a Government which borrows what it needs and has no profit and loss account to consider. It is possible, of course, that the national income may fall still low er; but it seems more likely that wages will not return to their pre war levels, nor will prices. If the efforts put forth during the war are maintained when our soldiers come back, it may prove that the national output will remain at a far higher level than in 1913 ; in that case both the real and the money income of the nation will be far higher than in the ye^rs before the war. Only by increased production can we really “ pay off ” the War Debt. As Sir Hugh Bell, President of the Economic Section of the British Association,writes in the Contemporary Review for July, 1918 : “ There are only two ways of ^ discharging a debt, the honest and the dishonest: the honest way consists in either earning more or spending less, and using the balance to extinguish the obliga tion.”
