government had to maintain as well as the huge amounts spent on welfare payments to the growing population worse. Loot and plunder - or at least the prospect of such - may play a role in war economies. This involves the taking of goods by force as part of a military or political victory and was used as a significant source of a revenue for the victorious state. During the first World War when the Germans occupied the Belgians, the Belgian factories were forced to produce goods for the German effort or dismantled their machinery and took it back to Germany – along with thousands and thousands of Belgian slave factory workers. Taxation Taxation can be one of the more politically contentious ways to finance war. Raising taxes is often domestically unpopular, as people know that higher taxes reduce their individual abilities to invest and consume. As a consequence, raising taxes on a tax-averse population in order to fund a war might result in widespread anti-war sentiment. Moreover, taxes confiscate a part of the labor and the capital of the population. During World War 1, the United States and Great Britain financed approximately one quarter of their war costs via increased taxation, while in Austria the contribution of taxation towards the expenditure was zero. [3] The British government felt that they were an exception to this general rule and they saw their wealth and financial stability as one of their strongest warfighting assets. The income tax was therefore increased from 5.8% in 1913 to just over 30% in 5 years in 1918. The threshold was reduced in order for millions more people to be liable to pay the income tax. Borrowing For the government another solution to finance war is for the government to increase its debt. When the Great War began, the majority of countries assumed that the war would be short especially in the eyes of the most powerful ally countries United States, Great Britain and France. They saw no need to raise taxes as it would have been politically difficult. It turned out however that it came at an extraordinary financial expense and as such thought it was best to pay for it by borrowing money and could thus transfer the war costs to future generations. The government can issue bonds that are bought by creditors, usually the Central Banks. The sacrifices are as a result differed,