The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-04-13


prescribed by the Legislature, which every
taxpayer must make when he hands his
return to the assessor, the taxpayer is com,
PEELED to swear that he has not deducted
from credits due him any bond. note or
obligation of any kind given to any in
surance company on account OF premium or
policies
Suppose had given company premium
notes 10 the amount of $1,000 Suppose the
surrender value of my policies is $1,000. This
board says that / shall be taxed on that
surrender value although the law forbids
me TO deduct the 81, 900 premium notes due
the company. Or suppose my policies have
a surrender value of 5000 and borrow
that amount on my policies. This board
says that although the law forbids me from
deducting that Indebtedness. az l may do
with all other indebtedness, yet am 10 be
taxed on a surrender value, every dollar of
which / owe.
NO matter what bond. note or other
obligation L have given an insurance
company on account of premium or policy;
no matter whether il is premium owed
TO the company or loan made to me s.o py
myself with that indebtedness although l.
may credit myself with all other indebted
ness. And yet your board, which has no
legislative power but is an executive body.
proposes TO tax a policy holder on his
policy when he cannot deduct one cent OF
indebtedness which he may owe on that
policy.
Thus it is clear that the law affimatiye-
~ forbids the action you have taken the
law says: AS policy values are not to be
taxed to the policy holder, therefore he
shall not have credit for his policy in
debtedness. Thus it conclusively appears
that the very action taken by the board is
forbidden by the very statute by virtue OF
which this board exists, by which ii is gov
yerned. and from which all its powers and
duties derived.
PROPOSED TAXATION IMPOSSIBLE.
why did the Legislature refuse to al
low policy holder to credit himself with
policy or premium debts? Because the
Legislature understood that the policy
holder is not to be directly taxed on his
policy values. Why is he not to be directly
taxed as this board proposes, on his policy
values? Because. first, such direct taxation
is, as our law now stands. impossible; and
second he is already indirectly, but none
the less surely taxed on every dollar of
his policy values.
THE law says that all property shall be
appraised and taxed at its true cash value
by which is meant the usual selling price
being the price which could be obtained for
said property at private sale. But who
surance policy is? But the law goes fur
Their. 1t provides that every species of
property taxed may if necessary be sold
preceding sections command the treasurer
to collect delinquent taxes at any time by
levy and sale of personal property: But
an insurance policy cannot be sold in that
way. The great majority or policies are
payable to wife, child or parent. They must
agree before the policy can be transferred.
And the purchaser must have an insurable
interest such as near relationship or
creditOrShip. Our Supreme Court has con-
demned,. in language as vigorous as II is
wise. all speculative purchases of policies.
Keeping all this in mind, suppose that a
man has a $4,000 life insurance policy, fully
paid up. and no other property whatever.
real or personal, is sometimes the case.
You tax the value of that policy; the tax
becomes delinquent: the treasurer attempts
to sell that policy TO make those taxes. OF
purchaser. a,
purchases that policy as a speculations as
a good investment-the very thing no man
commonwealth. If you could make such a
sale as that you create an inducement for
the blacklist of crimes; and that Is why the
law declares that speculative assignments,
purchases and transfers of policies are
void and that none but those having in
surable interests may hold policy on the
life Of another. Even If this fixed insur-
mountable obstacle were not in the way,
even if any Speculator in human life could
purchase policies at tax sales, the State
could give no title, because the State could
not compel the beneficiary to agree to the
transfer. | do not say that law could
not be devised which would supply a meth
cd and machinery to secure this end but 1
insist positively that the present statute
is not such a law; / assert positively that
the Legislature has not yet created the
necessary method and machinery to &C
complish that end.
WOULD BE TRIPLE TAXATION.
THE law forbds the direct taxation of
policy values, as now proposed by this
board because every mill of those values
is already heavily taxed in another way.
| Section 81 of the laws of taxation provides
| that foreign insurance companies shall,
| twice each year, pay into the treasury s.
for every 800 dollars of premiums collected
| during the preceding six months less the
| losses actually paid within the State.
Who pays this extraordinary tax? The
| policy holder pays 1t just surely as he
| pays the agents commission, just as surely
as he pays his premium. Fer a premium
| is composed of three elements, the re-
| serve element, the cost of insurance ele-
ment and the loading element. certain
per cent. OF all premiums Is made up OF
! loading'-that is, of that poicy's proper
| ton of all expenses such as taxes, commits
| sions. salaries. rents, etc,
| Now the surrender values and paid-uI
values which you propose to tax are made
| up OF those premiums exclusively. Every
| dollar of those values has been made VI
| out of the premiums paid by the insured
and the earnings thereon. But under Sec.
ton 81 those premiums have already beer
taxed per cent. 1t, of course. follows
which are composed of those premiums, have
| already been taxed; since to tax the parts
| of which the fund is composed is to tax the
fund itself.
| lis not this double taxation? 1 assert
| that II is even worse than double taxation
l assert that it is triple taxation. Be
i
| ues, which you now propose to tax. is al
| ready taxed in the Jurisdiction in which il
| is located; in addition to this the pre-
NUNS composing these values and making
| up that fund are taxed I'm the State OF
| Indiana per cent. before they go out OF
| the State; and now it is proposed to tax
| those values third time So that al
we are here asking this board to rescint
| Is a proposition to tax the same thine
| three times. 1t ought not to require any
argument to induce the board TO rescinC
| such an action as that.
| THE auditors report for 1886 shows thai
| the tax paid by the policy holders of life
insurance policies under Section 81 amount.
sum approximating this has been paiC
| every year for years by the policy holders
| of Indiana, and. although the taxes laid IN
other States upon the funds which con
rectly to the policy holder by the com
| pany, nevertheless. this board now pro
poses to tax them a third time. Do you
| gentlemen? l refuse to believe that your
attention had been called to the features
| of the law above discussed, when you re-
solved to lay upon class of citizens a new
| unusual, unprecedented and unheard- OF
/ burden, not by authority of any express
statute. but by inference purely. and al
| Inference which has escaped the 'keer
| vision of every former official the State
| ever had
L. CONSTRUCTION OF TAX LAWS.
/ IF you have a doubt as to the validity
of your action it is your sworn duty to re-
solve that doubt in favor of the citizen
For the tax laws of Indiana are highly
| penal laws If a person refuses to answer
any question on the schedule or any inter
| rcgatory asked him by the assessor, h,
may be fined and imprisoned (Section 81
| Laws of TaXation) Other heavy penaltie,