44 HOW TO PAY FOR THE WAR

The reader will readily perceive that the sameresults could be obtained by reducing theexemption limits for income tax and raising therates of income tax and surtax effective at differentlevels of income to the percentages of income setout in Appendix IV . For those who dislikefancy schemes and prefer to keep to well-under-stood methods, this is the sound alternative. Ifit is accompanied by family allowances, I see nofiscal objection to this solution. Socially I preferthe more novel proposal, which retains a strongerincentive to effort, gives less sense of sacrifice andindeed requires less, and spreads through the com-munity the advantages of security, which savedresources afford, far more widely than before.

CHAPTER VII

THE RELEASE OF DEFERRED PAYAND A CAPITAL LEVY

That part of the earnings and other income ofthe public to be deferred under this plan wouldbe placed to the credit of its owner as a blockeddeposit in the friendly society or the approvedinstitution selected by him, as proposed above,or, failing such choice, in the Post Office SavingsBank carrying interest at per cent compoundinterest. If the yield aimed at in the abovescheme was reached, the gross amount accumu-lated in this way would amount to about £600million a year. In fact the accumulations might