The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1898-02-25

and careless of those who really compose
these corporations. or where their funds
come from and what they are held for. Not
a session of a Legislature passes an any
or increasing the taxes on life insurance
companies are brought forward and almost
always with some degree of success.
1t is high time that policyholders should
understand clearly and precisely how this
matter affects them personally; that what
ever their company is taxed is paid by
themselves; that the tax Is really upon
them personally, and that the company
merely collects il from them ana pays 1t
over to the. State. For mutual company
has no funds except those derived from the
premiums paid in by its policyholders The
premium paid In by member or policy
holder is calculated to fulfill two purposes:
First, to pay the death losses of the year,
and also to provide reserve against the
certain future greater losses as the men,
bership gets older; and second. to pay run
ming expenses. These things cover the nor
NAL cost of insurance. Whatever is left OF
the premium after providing these things
through the year is surplus, and is returned
TO the polcyhoder as an overpayment; or
in ordinary, but incorrect speech. as DIV
idend." Whatever is paid for taxes comes
out of that surplus and makes the return
of surplus just much less and makes the
cost of his insurance just so much more.
Any tax on a life insurance company or on
its premiums is direct tax on the indivld-
ual policyholder who pays the premium
taxed. He does not see the tax. II Is not
intended that he should. 1t is intended that
he shall suppose that it is tax on cor
poration only and not on him. But he pays
it and no one else, and II is the states ad-
dition to the cost of his familys protection.
A second matter for your most serious
consideration is this:
Life Insurance Ought Not to BE Taxed
at All.
Taxation ought to bear on the possession
and use of property and not upon the loss
of property upon the means by which
such losses are distributed.
I, Of fax
alton is the collection of only such moneys
as are necessary for the proper and legltl-
mate expenditures of the State. from such
sources, that Is, from sucn persons oWh-
ing such properties, ought 10 bear those
expenditures and in the proportion to which
they ought to bear rhem.
Under such a theory no one would sug-
gest tax upon peoples losses. These
could be regarded neither as the proper
subject matter of taxation nor as hu-
name basis of the distribution of tax bur-
dens.
TO illustrates:
No one would suggest that because
mans house. on which he has been paying
taxes has been burned, he should at once
Just lost Or that a mans family should
be taxed on the money value OF his lie
to them. because he has died and they have
lost that value
Insurance is merely a method of distrib-
uting the property losses of those who have
lost property among those who have not
lost it. 1t is effected through contributions
AS house. worth 5000, and on which he
has paid taxes while it was In being, mas
burned. A has lost S. 900. There is no re-
storing it, That property and its value are
gone forever, not only to A, but to the
whole world. To tax on that loss would
be unspeakable inhumanty.
But A has insured against that loss-that
is, he has agreed with other house owners
to share their like losses if they, will as
sumo his loss if it comes. While his house
is unburnt, he, by his premiums. assumes
his share of the losses of those ss:s whose
burns, they, by their premiums, take his
loss on their shoulders and make ii good
to him. They lose it instead of A. because,
before that, he had, through his premiums,
been losing his share of their houses which
had burnt.
Their assumption of the loss and giving A
the money in place of his house hasn't re-
stored the house. 1t hasn't changed the
loss into gain, or into an even thing The
merely been distributed. A is made whole,
but the contributors to that result have
taken the loss to themselves and are Just
so much worse off. They have lost AS
house. They have divided up the 5000 loss
among them.
TO tax A additionally on the $1,000 because
it was returned to him would be inhuman.
1t would be to make him lose something
in spite of his own and others enorts TO
avoid loss. 1t would be loss created ana
inflicted by government on the occasion OF
his escaping from a greater loss. 1t would
be fine ON him for not losing;
TO tax the other men, who, by their pre-
miums, have taken AS loss upon them
selves and distributed it among themselves.
is an equal inhumanity. They have made
AS loss their own to save him. To tax
them on their loss is an equal outrage TO
taxing A upon that same loss If it had re-
manned on him.
1t is taxing a loss and it is fine, a pun
ishment upon men for so sharing each
others losses that it becomes possible for
them to be borne. The group of men form
ing mutual insurance company can to-
gether bear losses which would crush and
destroy the individual. But 1t is as inhu-
nd fxy,~o fn q losses
group as to tax those of the individual
which he would have to bear but for the
action of the group.
The only element in the transaction that
suggests taxation of these losses, either to
the individual or TO the group or mutual
company is the fact that it requires the
use of money to adjust them, and that the
monev is brought into sight. in the hand
of the adjusting association or corporation;
and in easy reach of the tax-gatherer, and
so becomes a temptation to ignore the true
nature of the fund which is simply the col
lective losses Of the group or company,
thereby relieving the lndlvldual calamlt1eS
of its members.
Life insurance differs from fire insurance
only in the subject matter OF the loss. In
stead of mans losing his house or other
perishable property, his family loses the
money value, the earning and producing
capacity of his life. His life, it's money
value. what it will do for them. what it
will earn, is just as much property, and
their property, their financial dependence,
as is the house; and the loss of that life
that of his house is to him.
For example: If q man. aged thirty, Is
earning 81 900 a year for his family, taking
his chances of life according to the actu-
aries table, and assuming money to be
worth per cent, the present value of his
life in money to his family is $4,000 That
is their actual money property in his life.
That is the money they lose if he dies.
If, when he dies, the State should openly
tax that family on that loss, on that
amount, the world would stand aghast.
Such q government could not live, for no
one could live under it.
Life insurance is simply the distributor
of the loss of family property in the lives
of husbands and fathers. The father, while
he lives. by his yearly premiums assumes
his share of the loss of those families whose
heads have died during the year All the
fathers who have associated themselves
with him do the same thing They, by their
premiums, take each family's loss as it oc-
ours over upon themselves and divide ii
among themselves. They lose the money
value of the mans life instead of his fam
lily. The family Is not financially crushed.
for these men have taken the burden from
1t. They not crushed. for they are
many and have divided the burden, and the
losses do not come all at once. But these
men have lost the money value of that life
it if these men had not assumed and d-
vided it among themselves.
To tax them a group or company upon
the loss they have thus assumed and suf-
fered is as abhorrent to justice and human
ity as ii would be to leave the loss on the
family and then tax the family that loss.
The division of the tax among these