South Bend news-times. (South Bend, Ind.) 1913-1938, 1920-04-07
ERSKINE BLAMES
INTERNAL REVENUE
LAW FOR PRICES
Head of Studebaker Corpora
ton Asks Congress to
Repeal Measure.

Present high prices and the alb
normal conditions obtaining gener-
ally throughout the country are at
tributed in a large measure TO the
existing internal revenue law, en-
acted BY congress two years agO
IS a war measure. IN a letter by ~
Il. ErsSfne. president OF the Stude-
baker corporation, 70 Congressman
j. W. Fordncy chairman OF the
house ways and means committee.
Pres't Erskine declares that there
IS a widespread recognition Of the
oppressive burdens and restrictions
OF the law, and asks that the COM
ing presidential campaign be disre-
parded by congress in alternating the
present situation.
Pres't Erskinc's Letter.
Copies Of the letter 20 Congress
man Fordney have been sent %
Sens Watson. New and Townsend
and congressman Hickey and DOre-
mus. The letter follows.
The existing internal revenue
law. which was passed by congress
TO finance the war. and which has
been effective for the past two years,
IS at present seriously Injuring the
business OF the country. promoting
high prices. and generally prevent
ing the return OF normal conditions.
There Is a widespread recognition
of the oppressive burdens and re-
strictions OF the law. and a general
feeling, both in congress and out
side, that action might well be taken
10 rectify conditions, and yet with
the presidential campaign coming
on. II is said there are some mem
bers Of congress who fear It might
be inexpedient TO tackle the situa-
ton at this session. Nevertheless,
i am sure that the members of con-
gress consider the prosperity and
happiness OF the nation OF para
mount importance and above all
political considerations, and II they
are convinced that immediate legis-
latiOn is essential to the national
welfare. they can and will act
with expedition. Constructive legis-
lation OF a beneficial character will
never hurt the prospects of any
party. but instead viii increase it's
prestige and popularity
After many days OF deep con-
sideratiOn, and discussions with men
Of affairs and experience. especially
in industry and banking, j believe
sincerely that congress should not
let the present session end without
revising the present internal revenue
law. The provisions which are
bearing hardest upon the national
welfare, IN my opinion, are as FOL
lows:
EXCESS Profits Tax.
The theory Of this provision was,
presumably. that corporations would
fhano fhnfT
income. but as YOU know. the
amount OF profits and the percentage
OF profits per dollar Of sales Of cor
porations generally were higher last
year than ever before. Some of the
steel corporations and others showed
decreases. but these reductions
were due to other causes and do not
change the fact, that. speaking gem
orally, excess profits taxes are passed
on TO customers. and have been for
the past year and are today one Of
the most potent causes of high
prices. believe that the truth Of
this statement is generally con-
ceded. but If IL is doubted, proof is
available in the income reports of
corporations on file in the treasury
department.
THE theory Of this tax is sound
in principle. and wealth should not
be spared in taxation.
However. the schedules under
the present law are much higher
than those prevailing in any coUn-
try in Europe or than have ever
heretofore prevailed in any country
except ours. We have less reason
for such oppressive taxes than Eng
nf no
tions. and our country is being in
Jured by them IN many ways. With
excess profits taxes. they also are
largely responsible Tor the high
prices prevailing today especially i'm
the mercantile trades where men
usually do business as individuals or
firms and pass these surfaces on
10 the consumers of food, clothing
and all necessities.
These merchants engaged in
business as individuals or as firms
must pay sur-taNes on the total in
come or their business at these
ruinous rates Of sur-taN. whether
the profits remain in the business
ar are Withdrawn. As rule, they
must leave these profits invested in
their business. TO finance growth. and
borrow money 90 pay taxes. The
sur-taX rates are much higher than
the rates Of excess profits taxes. SO
that these merchants are discrimin-
ated against in favor of their COM
DetitOrs who do business under
corporate organizations.
Human nature is such that they
proceed 10 raise prices as high as
possible and escape as much as pos