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p Throughout the history of capitalism wars have been a terrible scourge of humanity. War preparations and hostilities spell privations, suffering, death and other incalculable disasters for the peoples. The working masses are the first victims of wars and the arms race. It is precisely with their toil and with their hands that the imperialists prepare and wage wars in their class interests.

p As weapons of war become more and more sophisticated, wars take an increasingly huge toll of lives. The total of officers and men killed in all the wars of the seventeenth century is estimated at 3,300,000; in the eighteenth century, at 5,372,000; during Napoleonic wars (1801-15), at 3,457,000; between 1815 and World War I, at 2,217,000.  [254•1  World War I took a toll of 10 million lives, World War II, almost 50 million.

p Thousands of Vietnamese freedom fighters lost their lives in the inhuman US war against the heroic people of Vietnam. Plain American lads also died in this war waged in pursuance of the adventurist reactionary plans of US imperialism. According to US statistics, obviously understated, the US armed forces in Indochina lost approximately 46,000 officers and men prior to 1972.

p Militarism and the growing arms race bring colossal profits to the monopolies and new privations and sufferings to the working masses. "While enriching some groups of the monopoly bourgeoisie,” the CPSU Programme reads, " militarism leads to the exhaustion of nations, to the ruin of the peoples languishing under an excessive tax burden, mounting inflation and a high cost of living.”  [254•2 

p As noted above, at present approximately a half of the US federal budget expenditures is intended for military needs. An analysis of the total budget revenues shows the sources and methods of financing military expenditures. The funds required to meet both military and civilian expenditures are accumulated by the government through taxation, loans, 255 emission of paper money and other means. The main source of income for the capitalist state, the economic foundation of its existence and operation is taxes, the burden of which is shouldered mostly by working people. Karl Marx wrote: "The taxes embody the existence of the state expressed economically. Government officials and priests, soldiers and ballet dancers, schoolteachers and policemen, Greek museums and Gothic towers, the civil register and the table of ranks—all these fairy-tale creatures are contained in embryo in one common seed—the taxes.”  [255•1 

p The importance of each of these methods for collecting money needed by the government vary from country to country. In one and the same country their role may vary for different periods of its history. But military preparations and wars are invariably conducted in such a way as to make the toiling masses bear the brunt of the burden of military spending.

p The US military expenditures in the Second World War were much larger than in the First. It is reported in US publications that US military financing in World War II was more efficiently organised than it had been in World War I. From June 1, 1940 to December 31, 1945, about 43 per cent of the federal military and civilian expenditures was met with taxation and other government revenue, whereas in the First World War, these sources only covered a little over one-fourth of all expenditures. An increase in tax revenue was secured by raising existing tax rates, repeated reductions of the tax-exempt income minimum (from 1,000 dollars, for single taxpayers and from 2,500 dollars for those with* a family in 1939 to 500 and 1,200 dollars respectively in 1944) and by introducing new taxes, in particular, indirect taxation of prime necessities. Income tax rates were increased the most for low earned income (from 4.4 per cent in 1939 to 23 per cent in 1944).  [255•2  As a result of repeated reductions of the tax-exempt minimum, millions of low-income American families formerly exempt from income tax became taxpayers. All this made for a notable increase in the tax burden on the working people, whereas the capitalists used 256 various loopholes to conceal their true income and largely evaded paying taxes.  [256•1 

p The bulk of US military procurement in World War 11 as in World War I was financed out of state loans.  [256•2  This meant a rapid increase in the public debt (see Table 43) and the prospect for the working people to bear the brunt of this military spending for long years after the war, since loans are repaid at interest with tax money exacted from the people. In 1917, Lenin, in his article "A Turn in World Politics”, wrote that "the mountain of war debts shows the extent
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Table 43 US National Debt (end of fiscal year) Fiscal year Mil. dollars Fiscal year M»_air- Fiscal year Mil. dollars 1789-1849 63 1937 41 ,089 1956 272,825 1850-99 1,437 1938 42,018 1957 270,634 1900 1,263 1939 45,890 1958 279,147 1905 1,132 1940 48,497 1959 286,666 1910 1,147 1941 55,332 1960 289,243 1915 1,191 1942 76,991 1961 290,991 1916 1,225 1943 140,796 1962 301 ,047 1917 2,976 1944 202,626 1963 308,488 1918 12,455 1945 259,115 1964 314,377 1919 25,485 1946 269,898 1965 320,806 1920 24,299 1947 258,376 1966 329,473 1925 20,516 1948 252,366 1967 341,343 1930 16,185 1949 252,798 1968 369,800 1931 16,801 1950 257,377 1969 367,100 1932 19,487 1951 255,251 1970 382,600 1933 22,539 1952 259,151 1971 409,500 1934 27,734 1953 266,123 1972 437,300 1935 32,724 1954 271,341 1973 (es 1936 38,497 1955 274,418 timate) 473,300

Sources: The Budget oj the United States Government, Fiscal Year 1966, p. 490; Fiscal Year 1972, p. 575; Fiscal Year 1974, p. 370.

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of the tribute the proletariat and the propertyless masses ‘must’ now pay for decades to the international bourgeoisie for having graciously permitted them to kill off millions of their fellow wage-slaves in a war for the division of imperialist booty".  [257•1 

The past wars were financed in the USA mostly with government loans and the emission of banknotes, i.e., by methods securing mobilisation of funds within relatively brief periods, while shifting the main burden of military spending onto the shoulders of the working masses. After the Second World War, the immense US military activity has been financed above all from tax revenue. Of all the ordinary federal budget revenue, taxes account for 99 per cent, other receipts, for approximately one per cent.  [257•2  The latter include payments for various government services, fines, rent, donations, etc. In official US statistics revenue other than taxes comes under the "other receipts" item. In view of the negligible share of other receipts, it may be assumed that the US federal budget’s ordinary revenues consist wholly of taxes, whose structure is illustrated in Table 44.

Table 44 Administrative Budget and Trust Receipts (thous. mil. dollars) Fiscal years Type of revenue 1962 1965 1967 1969 1970 1972 1<»73* 1974* Individual income taxes ..... 45 6 48.8 61 5 87.2 90 4 94 7 99 4 Hi. 6 Corporation income taxes ..... 20.5 25.4 34.0 36.7 328 32 2 33 5 37.0 Social insurance taxes and contributions (trust funds) . . . Excise taxes** . . . Estate and gift taxes Customs duties . . Miscellaneous receipts" ..... 17.1 12.5 2.0 1.1 0.9 22.3 14.6 2.7 1.4 1.6 33.3 13.7 3.0 1.9 2.1 40.0 15.2 3.5 2.3 2.9 45.3 15.7 3.6 2.4 3.5 53.9 155 5.4 3.3 3.6 64.5 16.0 4.6 3.0 4.0 78.2 16.8 5.0 3.3 4.1 Total ...... 99.7 116.8 149.5 187.8 193.7 208.6 225.0 256.0

p * Estimate.

p ** Includes both federal funds and trust funds.

p Sources: The Budget of the United States Government, Fiscal Year 1972, pp. 567-68; Fiscal Year 1974, p. 61.

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p The table shows that direct taxes, i.e., those levied directly on taxpayers’ income, account for the bulk of federal budget revenue. Their basic types are individual income tax, corporation income tax, estate and gift taxes.

p Roughly two-thirds of direct taxes are individual income taxes. They had a relatively minor role to play before the Second World War, accounting in 1939 for only 19 per cent of the total federal budget revenue.  [258•1  However, as a result of repeated rate increases (for example, during the Second World War and the Korean war), reductions of tax-exempt minimums and raises in nominal wages and salaries (with a consequent wider income tax assessment and a higher rate on the rates scale), the revenue from individual income tax has steeply grown in the past 25 years to form the bulk of the budget receipts today. To meet the huge costs of the Vietnam war, the US Administration raised income tax 10 per cent in 1968. Individual income tax is levied both on wages and salaries of workers and office employees and on capitalist private income. Its overwhelming proportion, however, is formed of deductions from wages and salaries. For example, in 1966/67, they accounted for over 70 per cent of the total individual income tax revenue  [258•2 . In the USA, individual income tax is levied under a sliding scale of progressive assessment rates. This tax is based on graduated progression, i.e., taxable income is graduated into portions assessed at definite rates increased in proportion to income growth. The total tax is determined by the summation of charges on individual portions of income. With this tax assessment the total taxes paid by individuals with a huge income are far below the maximum tax rate in percentage to total taxable income.

p Another type of the US federal income tax is corporation income tax, which accounts for about 15 per cent of the total budget revenue. This tax is levied on the profits of corporations. As a result of the tax reform of 1964, on the first 25,000 dollars of profit the corporate rate went down from 30 to 22 per cent. On all above 25,000 dollars the rate 259 dropped from 52 to 48 per cent.  [259•1  By understating their true income, corporations evade paying taxes. Moreover, they are granted a number of tax concessions by legislation, for example, the privilege of accelerated rate of depreciation tax concessions for research and development, rebates for depletion of mineral resources, the right of payment out of corporate income of huge personal salaries and bonuses to corporation presidents and directors, concessions for the maintenance of country estates, monetary awards to lobbyists and many other payments out of corporation profits, reducing essentially the size of taxable income and, consequently, the amount of budget revenue.

p Estate tax is levied on property acquired by inheritance or bequest, and gift tax, on gifted property or cash.

p Indirect taxes make part of almost all consumer prices as a special surcharge paid to the federal budget. By raising goods prices, particularly consumer prices, indirect taxes keep down real earnings of factory and office workers. Lenin wrote that "indirect taxation affecting articles of mass consumption is distinguished by its extreme injustice. The entire burden is placed on the shoulders of the poor, while it creates a privilege for the rich. The poorer a man is, the greater the share of his income that goes to the state in the form of indirect taxes.”  [259•2 

p Before the First World War, the bulk of the federal budget revenues came from indirect taxes, while in the period between the two world wars their share was roughly under a half of the budget revenue. After the Second World War, the rapid growth of direct tax revenue resulted in a sharp reduction of the share of indirect taxes in the total budget receipts, though its absolute size increased. Indirect taxes are many. Among those paid to the federal budget excise taxes and customs are the main ones. In the post-war period, customs duties have accounted for a little over one per cent of federal revenues, whereas in the nineteenth century, they gave the bulk of the federal budget receipts.  [259•3  The 260 fact is that the United States instituted prohibitive tariffs to protect its home market against foreign monopoly competition, while the budget income on the whole was small.

p Summing up taxes paid by the US working people to the federal budget and the budgets of states and municipal governments, one will find that today they consume roughly one-third of earned income as against one-sixth on the eve of the Second World War.

p Growing government spending, mostly military, means an increasing tax burden on the working people. In the Town Hall of Stockholm is the effigy of an unfortunate little human being, crouched on all fours—his back supporting the larger statue of an ancient ruler of the city. Nobody knows who the heavily burdened man is, but Stockholmers like to quip: "It’s the Swedish taxpayer.” The US Business Week journal wrote in its August 25, 1962 issue that this cowed figure could well stand as a cenotaph to the Unknown Taxpayer in most Western lands today.

p The increase in tax revenue lags behind the growth of government, mostly military, spending. Taxation has definite political and economic limits beyond which its increase is socially dangerous for the bourgeoisie. The point is that the efforts of bourgeois governments to raise taxes on the working people to a maximum thereby reducing their real earnings are opposed by the organised class struggle of the working class for its vital interests. It is self-evident that in this situation taxes cannot be increased indefinitely; therefore a chronic budget deficit is compensated for by an increase in government debt.

p As was pointed out above, government loans were the principal method of financing US wars in the past. Formerly, however, the government debt was relatively small; what is more, the debt increased in wartime and notably decreased, as a rule, in time of peace. Until the thirties of the present century measures to avoid a large government debt were among the guidelines of the US official budget policy. The world economic crisis, the Second World War and the aggressive post-war policy of US imperialism led to a revision of the traditional US government attitude to federal debt. The unrestrained arms race and the use of the budget as a tool for implementing various state-monopoly measures to 261 mitigate the contradictions of capitalist reproduction and stimulate the nation’s economic development are responsible for the well nigh chronic federal budget deficit. Clear enough, in this situation a reduction of government debt is out of the question because this would require an excess of budget receipts over expenditures. And conversely, the offsetting of big annual budget deficits in the post-war period has involved a steady increase in government debt. It has been mounting rapidly in the past few years, as the Vietnam war has caused a record growth in the budget deficit.

p Speaking of the essence of loans issued by bourgeois states, Karl Marx wrote: "The ‘State’, that jointocracy of coalesced land and money mongers, wants money for the purpose of home and foreign oppression. It borrows money of capitalists and usurers, and in return gives them a bit of paper, pledging itself to pay them so much money in the shape of interest for each £100 they lend. The means of paying this money it tears from the working classes through the means of taxation—so that the people are the security for their oppressors to the men who lend them the money to cut the people’s throats.”  [261•1 

p Government debt increased by huge military expenditures is a heavy burden not only on the living but also on the future generations. Government debt means taxation by instalments because in the final analysis it is re-paid at interest from tax revenue. Therefore, future generations will have to defray a share of current military expenditures of the US imperialists just as the living generation has to compensate for military spending in the past.

p The mechanism of military financing enhances still more exploitation of the working people and serves to re-distribute the national income in favour of US ruling circles. This is effected, above all, by increasing the tax burden as described above. Not only do the methods of financing military spending make for an increased tax burden but they also generate some other phenomena contributing to a higher cost of living.

p This refers first and foremost to the inflationary price rise which is largely due to the budget deficit being offset by increasing government debt. For example, the rapid increase 262 in the government debt due to the Vietnam war was one of the rootcauses of sky-rocketing prices in the United States. The index of consumer prices (taking 1967 as 100) grew from 88.7 in 1960 to 94.5 in 1965, and to 116.3 in 1970. In this way, prices grew almost 23 per cent over five years, whereas the increase over the preceding five years (1960-65) was only 5.6 per cent.  [262•1  By May 1973 this price index had grown to 131.5.

p In the past few years, prices have been climbing to leave nominal wages and salaries way behind. For example, the average nominal weekly wage of workers in the US manufacturing industry has risen by August 1970 9.4 per cent since 1968 as against the 12.2 per cent rise in consumer prices. This price rise proceeding faster than the increase in nominal earning depletes the working people’s real incomes more and more. Add to this the growing taxes to see the disastrous fall in the working people’s real earnings.

p After the Second World War, the US working people’s stubborn class struggles secured a certain increase in real wages. This notwithstanding, the average real earnings of US industrial workers were below a decent subsistence minimum. For example, in 1965, this minimum for a family of four was 123 dollars a week, according to Department of Labour estimates, whereas the worker’s average weekly earnings were only 105 dollars, i.e., 15 per cent below the typical family budget. The plummeting real earnings of recent years have doubtless widened the gulf between the official subsistence minimum and the working people’s incomes. The growing military spending resulting in tax increases and a rising cost of living affects worst the population strata within low-income brackets. In his time, President Johnson noted in his economic message that 10 million American families (30-40 million people) lived in poverty.

p The disastrous effect of military-economic activities is to be seen also in the field of government social programmes. For example, the federal government, while escalating military spending in Vietnam, slashed outlays under the programmes of President Johnson’s widely advertised "Great Society”. The reduction of appropriations for social needs is 263 illustrated by President Nixon’s message to Congress on the administrative budget for fiscal 1974. Thus even modest civilian programmes, whereby relatively small funds were to be spent for the social needs of American society and for poverty control, have been sacrificed to the US military strategy.

p The USA spent on the war in Indochina more than the total appropriations for education, public health, hospital and housing construction, poverty control, maintenance of the administrative system, and other civilian purposes. This contrast was so striking as to be admitted even by top-notch US statesmen and politicians. J. William Fulbright, Chairman of the Senate Foreign Relations Committee, in his book The Arrogance of Power, wrote that "for the present at least the inspiration and commitment of the Great Society have disappeared. They have disappeared in the face of our deepening involvement in Vietnam, and although it may be contended that the United States has the material resources to rebuild its society at home while waging war abroad, it is already being demonstrated that we do not have the mental and spiritual resources for such a double effort".  [263•1  The huge US military spending diverts the nation’s resources from civilian needs. When planning budgetary appropriations the Administration and Congress give priority, as a rule, to military expenditures. As a result, acute social and economic needs of society remain neglected.

p Militarisation stepped up by the imperialists is a crime against humanity. Suffice it to mention that the US direct and indirect military expenditures are roughly equivalent to the gross national product of Italy. The examples below illustrate the extravagance of militarism. One modern war plane costs as much as 13 schools or 570 houses. The worth of iust one modern heavy bomber could double the education budget of the whole State of New York.  [263•2  The 22,000 million dollars the USA spent in Vietnam in one year could build 296,000 elementary and secondary classrooms needed to eliminate overcrowding and replace defective structures; 264 and construct and equip the 656,500 long-term care and hospital beds needed to adequately service patients.  [264•1 

p Imperialism is spending colossal funds for the needs of war whereas about two-thirds of mankind is still suffering from famine, malnutrition and epidemics, when despite scientific and technological progress, many countries still remain weakly developed. Millions upon millions of people live in slums and experience privations even in highly developed capitalist countries, let alone economically backward ones.

p Increasing militarisation means not only a growing tax burden and a rising cost of living, the diversion of a nation’s resources from civilian needs, but also restriction of democratic freedoms, an increasingly unstable situation of factory and officer workers, deterioration of their working conditions and greater labour intensity.

p Militarism and the arms race entail other socio-economic and political dislocations. The US sociologist D. Horowitz writes that the nation’s growing military-industrial potential not only inhibits its economic development but also strengthens the Right-wing political forces and provides the groundwork for unhindered accumulation of "critical social problems".  [264•2 

p The “ultras”, the neo-fascists are intimately associated with the reactionary military and with monopoly capital working for war. The militarist “elites”, often cultivated with American “aid” money, are a direct tool of forces opposing progressive democratic organisations, above all the working-class movement. In all capitalist countries where militarism develops to a considerable extent it turns into an extreme reactionary force launching an offensive against the fundamental democratic rights and freedoms.

The intensified militarisation and arms race in the USA stimulated by the aggressive policy of US imperialism and bringing huge profits to the arms-manufacturing monopolies are a heavy burden on the working masses impairing their social and economic conditions.