Defense, Controls, and Inflation.pdf - The Ludwig von Mises Institute

18 Defense, Controls, and I nfiationmeans of preventing inflation, there was also support for pricecontrol on the assumption that inflation was otherwise prevented.Thus it was urged that free-market rationing by pursewas not acceptable during an emergency characterized by substantialreductions in the su.pply of civilian goods. The resultinghigh prices for some of these goods will deny lower- andmiddle-income families access to the goods which they arein the habit of consuming. This issue was not fully exploredat the conference. Consideration of it would involve discussionof the need for a specific alternative system of rationing andwhether, given such a system, price control is also required. Itwould also involve the more fundamental question of whetherthe underlying issue is not the fairness of the distribution ofincome and wealth.What would be a fair allocation of the tax burdenP-Thereare as many proposals for taxes to meet the costs of mobilizationas there are kinds of taxes. One's views about this mattertend to reflect general views on the relative equities of varyingkinds of taxes at any time. Sales taxes, for example, were objectedto as regressive. Special excise taxes were suggested bythose persons who felt that consumption of certain items wasnot important or necessary and could properly be reduced intime of emergency. No attempt was made to resolve the impossibleproblem: What is a necessity?There was general agreement that the amount of revenuerequired to meet the costs' of mobilization is such that the taxbase would have to be rather.broad and that this might suggestsome lowering of income-tax exemptions. 18 On the other hand,reliance on income taxes was objected to as likely to involveso much progression as to impair incentives. 19 Considerable18. MR. BRUBAKER: I strongly oppose any reduction of present individualexemptions, as I know a number of other conference participantsdid. The discussion on this particular point, as on many others, was totallyinadequate to warrant any such conclusion as indicated in the Introduction.19. MR. SHOUP: It seems to me that it should also be noted that an increasein the income tax has likewise a simultaneous effect in the oppositedirection, increasing the incentive to work.