The herald., 1898-08-09
TAXATION OF FIRE COMPANIES
ALLEGED UNJUST
SHARP MINING PROMOTERS
Life Insurance NEUTRALITY-SUSPICIOUS.
Praise of California Olive OIL.
Money Lenders License
OFFICE OF THE HERALD,
Los Angeles, August s, 1898.

The methods of taxing fire insurance
companies and the Inequalities OF the pres
ent system are set forth In a pamphieA
which the National board OF fire under-
writer's will send to the members through
out the country In a few days The docu-
ment contains portions of the address de-
Nvered by Henry w. Eaton before the ma
tional board in this city few weeks ago.
and calls attention to the system OF taxa
ton in vogue In Great Britain, where
company, 1t Is said. would pay only $l3'ooo
for doing business which would be taxed
in this country $lO2,oOO. 1t is shown that
during the last decade companies reporting
70 the New York insurance department
alone have paid taxes aggregating $z'oso-
6l5, indicating that the percentage OF tax
to profit (from 1883 to 1880 was 221.2l. and
that Of tax to premiums Qess losses) o'sA
Mr., Eaton's disclosures have attracted
general attention. and underwriters for
month or more have been considering the
subject In all its aspects. 1t Is said that
during the eleven years prior to 1871 the
"nctual percentage of taxation to net pre-
mums after paying losses and expenses
was 2l.49. In Arizona. where the business
showed loss of S79,764, tax OF $9,0n was
imposed. Tho companies had to pay sl77A
for the privilege Of doing business In Della
ware, at loss of sll0,S91. For protecting
citizens Of North Carolina at a loss CT VIA
426 a tax of $91. 700 was paid. In Vermont.
where tax Of $77,S79 was imposed, the
companies experienced loss of $i6,7lo.
Comenting upon the showing, Mr.. Eaton
says:
1.-THE taxation OF fire insurance COM
panies has become such serious burden,
and has increased the expense of trans
acting the bushes to such an extent, as to
make 1t worthy of special consideration.
The committee on legislation has repeated
ly shown that any tax upon gross re-
ceipts is unjust, and yet most of the states
continue TO impose taxes upon that basis.
1t has laid down the principle that in fire
insurance IL any tax be levied upon pre-
nliums, loses should be first deducted, but
as yet the tax laws of only five states
recognize this principle. Three states, In
diana. Oregon and Washington. allow the
deduction of losses; Nebraska allows the
deduction OF losses and expenses and Ar
kansas deducts losses and commissions.
FOR the most part other states tax COM
panies either directly or through the OPP
Grafton of reciprocal laws on their entire
premium receipts, SO that In effect e tax Is
levied even on the amount paid within
state to it's citizens as indemnity for
losses"
Mr.. Eaton, in speaking of the matter.
said to-day: 1.-THE public is vitality inter-
ested in the taxation OF insurance COM
panies, for the expenses of the latter
have to be provided for In the premium
charged the capital merely furnishing
guarantee fund in case the moneys drawn
from the public arc inadequate to cover
losses and expenses. So far from states
and municipalities imposing burdens on
fire insurance, indemnity of that kind
ought to be encouraged and fostered, for
states and municipalities should be greatly
concerned to have the fire waste OF tax
able property restored, especially by con-
tributions of the public in other cities and
lands What an enormous amount of tax
able property would have been wiped out
of existence by the Chicago fire had 1t not
been for the protection afforded by insur-
ance companies. Legislators. 1T must De
presumed, are ignorant Of what insurance
really is, or they would not tax the people
for carrying out prudential transactions.
Mr.. Walton, president Of the Citizens In
surance company of New York, when pres
ident OF the National board of fire under
writer's. very properly asked the colleges
TO train young men so as to understand
the relations of insurance companies to
the public and we can hope that the COM
ing generation will he better acquainted
with the facts"