The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1897-05-26

effort was made by the tax commissioners
of Allegheny county to tax life insurance
policies that had present cash value. The
matter was submitted to the attorney gen.
eral or Allegheny county TO tax life insur-
ance policies that had a present cash value.
The matter was submitted to the attorney
general and, In a well-reasoned opinion,
which viii hand to the court, he decided
in the negative.
If life insurance policies are taxable in
Indiana. it will be the only State or gov
eminent imposing such taxation. The State
had far better aid men with small incomes
10 carry life insurance than TO make it
more onerous to them to insure their lives.
1t would thus reduce the constant flow Of
population 10 the poorhouses and the or
phan asylums. Upon far wiser and more
enlightened plan than that which is now at
tempted In Indiana the English government
IN every way has aided its people TO insure
their lives. So far from taxing life insur-
ance policies. it has established a life in
surance bureau, by which citizens can in
sure their lives under the protection of the
guarantee of payment. So in Germany
there is a life insurance system under gov
ernmental management, toward which the
government contributes
During all the argument here there has
been much said about the reserve which
the companies maintain under requirements
OF many of the States for the security of
their policyholders That is Il matter be-
TWEEN the State and the companies and is
matter of no concern to the policyholder,
except as II is regarded by him as a reason
Tor insuring in company operating under
such q law because Of the feeling of securi-
ty which it gives him in the strength of the
company The reserve is q test of solvency
fixed by the State. 1t is that and that
only and no part Of 1t belongs to any in
dividual policyholder. A policy in a COM
pany maintaining reserve costs more
than in company that maintains no re-
serve. If II is true as many earnestly con-
tend that the policy in a company not MAIN
tanning q reserve is as safe as in a reserve
company, then the policy in the nonreserve
company is of more value and should be
rat Nor hoy VAa1f -,
pany.
"A contract of insurance for 5000 pay
able at death that costs $50 annually is
worth more to the policyholder than a
policy in the same amount that costs $50
annually, because the same benefits are de-
rived in each, and the one that costs less
surance taken by man at twenty-one
years of age for So is of more value when
policy taken out at the age of fifty, be-
cause it furnishes the same insurance at q
less cost.
MIR. FINCH ILLUSTRATES.
IF man has a long-tim lease on a
building at 500 year. which by reason Of
business changes, after the making of the
lease is worth $500 year. it is a better
contract TO him and worth more TO him
than lease made at the present value.
And for the same reason is a life insurance
policy in the illustration given of greater
value.
While a policy of insurance is in force
as policy of insurance it can only be taxed
as a policy of insurance and for it's value
as such; and because 1t gives him the right
to surrender it and receive something in re-
turn as a paid-up policy or a cash sum,
does not add anything 10 it's value as a.
policy OF insurance. The right to surrender
is not in itself taxable. Only after this
right has been exercised and something re-
ceived in return can that which is received
in return be taxed. The right to receive
something on surrender of the policy is not
subject to taxation.
Suppose q lease for twenty years is exc
cuted for 500 year on building to be
erected which provides that it may be as
signed at will by the lessee upon which ten
years rent is paid in advance, with condi-
ton that the lease may be surrendered at
any time within ten years and the lessee
receive IN return ratable proportion or
the money paid. And further suppose that
by reason of business changes the building
will now rent for $500 per year and the
lease may be sold and assigned under the
contract accordingly. Under such an as
sumed case ii will hardly be claimed that
ject to taxation either for its market value
or for the surrender value so-called.
This is not simply an effort, nor can it
be, under the rule of equality, more an
effort to tax few or a certain class Of
life insurance policies. If any life in
surance policy is taxable issued by any
sort of company, by the same rule all life
insurance policies are taxable. The matter
of one company maintaining reserve and
q
serve cuts no inquire. There IS, indeed,
more nonsense talked about the reserve in
life insurance. as far as it concerns the
right of the policy holder than OF any mat
ter in life insurance Because the State
fixes, as a test of solvency requirement.
that companies shall maintain a reserve
against each policy is no warrant for the
belief that a policy holder has any other
rights in the company or any other right
by the policy. The State, for the security
of the policy holder, requires the company
to keep itself always, ready or in condi-
which is done by maintaining reserve;
but this does not change the policy con-
tract. The rights of the policy holder are
fixed in the policy, and there is no warrant
of law for claiming that a policy gives any
other right or that there are implied rights
company, under State requirement, must
maintain a reserve. The rights of the poll
icy holder are purely contractual. There
has never been any judicial recognition or
the claim that the policy holder has any
right other than as fixed in the policy The
question of the reserve mas never been con-
sidered as fixing the rights of the policy
holder in any other case than in the case
of insolvency of the company and in the
case of war where, by reason of war, the
policy holder was unable to continue pay
ment of his premiums. In such cases the
courts have looked to the reserve to fix
the dividend the policy holder should re-
ceive from the assets or to rightly adjust
his relations to the company when he is
urable, by the overpowering force of war,
to continue MS poncy.
Not everything which is of value to q
man is subject of taxation. Only that is
subject of taxation which is made subject
of taxation by the Legislature. The Board
of Tax Commissioners has no more power
to say what shall be taxed than has any
| other body of reputable citizens. 1t Is a
function of the government, and cannot
be delegated. If the position Of the tax
board can be sustained the insurance pol
icies of the citizens of this State will be
practically confscated. If they are subject
to taxation this year they have been sub
ject TO taxation since 1881, and the assessor
or auditor must call upon the holders for
the tax for the fifteen years last past"