The morning call., 1895-02-12
Injustice Of the Proposed Tax on
Gross Incomes.
COMPANIES FEAR FOR THEIR SAFETY.
Hart and Mitchell Are Enlightened As
to The Alleged Ruinous Nature
of Their Measures.

| the Firemen's Fund and companies OF like
grade to disincorporate." This is what
NJ. R. Higgins, State Insurance Com
missioner, declared tonight. His ref
erence was to the bills introduced by SEN
ators Hart and Mitchell, one of which levies
a tax of per cent on the gross incomes on
insurance companies not Incorporated IN
this State and the other makes a levy of L
per cent. 'The other States, which have
retaliatory laws, would enforce them
against California insurance companies
and the result" continued Mr.. Higgins,
''would be to drive many of our worthy
| home companies out of existence"
T. c. Coogan, w. w. Foote and Julius
Kahn appeared tonight before the Senate
/ Committee on Corporations, of which SEN
ator Orr is chairman, in behalf of the in
surance companies which are protesting
against what they believe to be cinch legis-
lation.
Senate bill 554 by Hart, and Senate bill
314 by Mitchell, were taken, up jointly in
committee The first provides tax of 3
per cent on all fire and life insurance COM
panies not incorporated under the laws OF
California, and makes this tax payable in
December, to be credited to the school
fund.
Senator Mitchell's bill fixes the tax at 1
per cent, making it payable in July, and
credits it to the general fund. Attorney T.
c. Coogan made an able argument against
the bills. He asked why the provisions
of the bills should apply only to insur-
ance companies and not to other corpora
tions.
He thought it was unfair and directly
opposed to the mandate of the constitution
1.-The bills" he said, 'are inequitable and
unjust; no State imposes a tax on the
gross income. If you impose tax on the
gross income you tax the losses and you
tax the expenses of fire companies. The
expenses in California are very high, fully
35 per cent of the incomes.
s'There is vast amount of reinsurance in
California and the first company would be
compelled under either of the proposed
laws to pay the full tax on the reinsurance.
In other States fire and life companies are
exempt for the amount of the reinsur-
ance."
docs that make it clear to you? 2" he
asked of Senator MCGOWAN.
eyes, but | am not a member of the
committee" replied the Senator from
Humboldt
at is for that reason that l address my
self particularly to you, was the reply.
'Does it affect mutual insurance COM
panies ?" asked Senator MCGOWAN, referring
to his pet bill.
"It does not" replied Mr.. Coogan, who
then went on to state that the insurance
"a
and towns of the State. The losses alone
to the fire companies in the State aggregate
50. 100000 a year. No foreign company
could do business in this State with gross
income tax.
1t happened not infrequently that their
losses and expenses exceeded their profits.
He asked if it would be right, when an in
surance company earned $500, 900 in pre-
miums and its losses and expenses aggre-
gated 100000, to tax the company per
cent on 100000.
Senator Mitchells bill, Coogan declared,
was the broader of the two, as it embraced
not only fire and life but accident, marine,
plate glass and fidelity companies But it
was wrong in principle. He asked if with
a national income tax the State wanted to
add a tax to incomes, and added: eff that
is the case let us tax everything"
Hewas reminded that the income tax was
a Democratic measure.
"Upon which the Democratic party is
divided, replied Mr.. Coogan.
w. W. Foote and julius Kahn added
their arguments to support Mr.. Coogan,
and State Insurance Commissioner NJ. r.
Higgins made an extended statement rela-
tive to insurance matters in general.
Cornelius Sullivan asked that life compa-
MES be exempted from the provisions of
the proposed law. Companies were for the
most part not stock companies and were
not organized for profit.
Insurance Commissioner Higgins handed
a copy of Hart's bill to the chairman, and
he thought it might be amended The
percentage was reduced from to / and re-
insurance losses and expenses were de-
Quoted from the income subject to taxa
ton.
The committee went into executive ses-
sion. 1t decided to report adversely on
Senator Biggy's bill No. 10, which affects
insurance companies and places them at a
disadvantage compared to life and acci-
dent companies. Then Hart's bill and
Mitchell's bill were discussed.
There was division of opinion. Some
of the members favored reporting adversely
on the bills. Others thought substitute
might be drafted fixing the tax at per
cent and limiting it to net incomes.
Another meeting will be held tomorrow
morning, at which these bills will be again
considered
Attorney T. c. Coogan declared tonight
that there was no great opposition to a
small tax on net incomes, but that the pro-
posed tax on gross incomes would prove
ruinous to the companies.
A subcommittee from the Senate Com
mite on Finance and one from the Assem-
bly, Committee on Ways and Means met in
joint session tonight to consider the news
paper bills for publishing the constitu-
tional amendments.
There was disposition shown to scale
the bills. Much of the time was devoted
to talking over plans of classification of
the bills. No definite result was reached.
Senators Biggy, Langford and VOORHEES,
and Assemblymen Brusie and Laugenour
took part in the proceedings.
Greek Parliament to Be Dissolved.