Vermont watchman and State journal. [volume] (Montpelier, Vt.) 1836-1883, 1882-11-01
NOVEMBER 1, 1882.

foreign nre insurance companies; General 4. 4.
Ptkin OF Montpelier for the same class A. p.
Chids OF Bennington agent Of the New York
Life; Major Vim, before mentioned as aiding
the committee, and Colonel l.. X. Fuller Of Brat
tleboro. Colonel George W. Hooker called the
committee TO order and Mr.. Chids addressed the
committee in behalf Of foreign life insurance COM
panios and against the equity of taxing them In
this state. lie claimed that the vast amounts
reported as assets was mostly in governments
or investments which were already taxed In the
localities where the property was located or the In
vestment made, and that II the company was taxed
on that here il would be double taxation, and he
thought the state better get a system OF single
taxation somewhere near perfect before 1t at
tempted to go into doubling taxes. He claimed
that such law, by operating to raise the rate OF
insurance, would be eJ post tdcto and unconstitu-
tiona because 1t would change existing contracts
entered upon in good faith. No country, he as
serted, taxed life insurance except America. He
showed a long list Of statistics of how much
the several insurance companies paid in taxes
to the states wherein located, and II there was
another tax imposed 1t would be doubling the
taxation The principle was that the companies
owed all this vast amount reckoned as assets,
and person OF corporation should not be taxed
on what it owes but on what 1t owns. c. II.
Pitkn then invited by the committee TO
give his views the matter and he began by
stating that he appeared now, IA he had on
several other occasions, for the National Life
Insurance Co. of Montpelier. He congratulated
himself that there no bill pending, ~ he could
discuss the question without any prejudice bear
ing against him by reason OF any one, on or of the
committee, wishing to favor any particular meas
ure. In the first place. he was certain that
mutual life insurance was not understood by the
masses, and he proposed to explain 1t. He knew
| that this company, having five thousand policy
holders, nsuring S10,WO,OOO, and with gross
| assets Of 50, 800, 900, was tempting bait for
| legislature casting about for something on which
| to raise revenue But he asked them to consider,
| first that they should not be taxed on business
already done in or out OF the state, because the
| rate on which the business was done and the in
| a
| taxation, and 1t would be unjust and inexpe dent,
because the company is exempt from taxation by
its charter and having had the question several
| times before the legislature, and they had acted
| on 1t refusing to tax, they had no reason to
| suppose there ever would be a tax imposed. He
| explained in very clear and logical manner how
| this accumulation was simply like u number OF
| men banding together and when one died the rest
| handed over the money to one of the number TO
pay to the deceased's estate, and no one would
think of taxing the money as against that man,
| The company stood in precisely the same place.
| This money was held to pay losses. 1t was taxed
in the hands of the payee, and, when paid on
loss, against the receiver His argument
| throughout was one Of the most lucid explana-
tons OF the mutual life insurance system 1t has
| been our lot to listen to for many a day, and he
held the strict attention of the committee.
SAVINGS BANKS.
The hearing before the committee on ways and
means was continued Thursday, and the sub
iect of taxing savings banks was considered. l..
! l.
of savings banks in his locality. He said that the
Jamaica bank is strictly savings bank for small
depositors, having but $4,000. There are but
very few out-of-state depostors, and only re-
Gently began loaning out of state. He thought
small banks like his could not stand more than
the present one-half per cent tax, and the mpos-
ton of heavier tax would cause depositors TO
withdraw, and that would necessit,te raising
money on mortgages held by the bank which
would distress farmers and people in the vicinity
whose mortgages i holds; Only three had de-
posts Of over 1000 and he had taken special
care to keep tax dodgers from depositing
money to evade taxation. The bank was organized
in 1873, and has been running since, and s now
paying four per cent interest. The bulk OF home
loans are at six per cent, except one to town ut
five per cent. Western loans bear seven to
eight per cent. Hon. W. G Shaw of Burlington
represented the Winooski savings bank in that
city, and the Burlington trust company. lie said
the Burlington savings bank had always taken
conservative stand in keeping out large deposit
ors and those who would put money in the bank
to avoid taxation. The bank has paid back large
deposits. The only and largest dividend this bank
has been able to pay was four per cent per an
mum. II has likewise cut down the limit of
single deposit to 81 800, and should like 1t TO he
cut still lower. OF the amount on deposit only
small part is loaned out of the state. Mr. Shaw
thought the method Of taxing the entire deposit
and having it paid into the state treasury by the
bank, the best method, as it did not vex or
haIass the tax payer so much as to lay the tax
directly on him. and the amount obtained for
taxation would be much larger than could be got
7 at by the most stringent oath. He further said
that one-half of one per cent was as large a tax
AZ the savings banks could pay and make divi-
dend of four per cent, and il that dividend WAS
lessened, foreign deposits would be Withdrawn.
The question that was chiefly considered was the
advisability of paying the tax on savings banks
and other corporations directly into the treasury
and paying the state tax Herewith. This would
relieve all towns Of a state tax There Is deposit
OF ST., 900 in the savings banks of Vermont
and of this there are S670, 600 In government
bonds. Major Vim gave his views OF the taxing
| of insurance companies and the objections adj
vanced by them The first objection was
that it was double taxation. This argument
ought not to be OF force because there is no law
in Vermont recognizing double taxation and what
is called double taxation is applied To individuals
and there should be no exception in favor of an
institution. The next objection was that 1t was
an e1 post fdcto law. This point has been ad-
verseIy decided by the courts Of Massachusetts
and does not enter as an argument. Next, that
business already done should not be taxed be-
cause the business done under an exemption
act and should therefore never be taxed This
} Is not tenabe, as the parties who took the nsur-
! anee were bound to know what the powers OF the
legislature were and that a tax was possible TO
be laid II they did not do 20 II is not binding
/ the legislature, and reas nable tax is not bad
faith rs this taxing was one of the risks the in
sured took when he invested As to the point that
the of life insurance company should not
: he taxed because 1t was, as claimed, loss, Major
Vim claimed it was cash, not loss. That the
cash was taxed, not the exigency for which the
cash Is kept There is no intention to tax the
} company (speaking Of the National Life of Mont
pelier), but the money kept ON deposit with that
company. The only reason why life insurance
should not be taxed is the nature of Its beneh-
= ciary. This reserve Is used, loaned and traded
the same as savings bank deposits except that the
interest of the latter is paid perhaps TO some
other person than the deposition. 1t is an invest
ment for the profit Of some one. The main argu-
meut against taxing the reserve was that 1t would
endanger the ability of companies to pay their
} losses. lie did not think the committee should
consider so remote contingency. The compa-
MES admitted that at four and one-fourth per
cent they could keep up the surplus and meet
} LOSSES II was further admitted that the prevail