The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-08-30
INSURANCE. TAxATIoN.

In his annual letter to the policy
holders of his company, Mr.. Joseph A.
DeBoer. president of the National Life
insurance company of Vermont, makes
this reference to the subject of taxes:
We cannot, and do not, object to
reasonable tax on life insurance, pro-
vided 1t be evenly and uniformly dis
tributed and be held as a tax in lieu
OF all other taxes. Such a reasonable
tax would perhaps be 1 per cent of the
gross premiums collected in each state
When to a variable percentage tax on
premiums is added yet more variable
taxation by way of licenses, fees. and
municipal exacsions. the burden OF this
account certainly becomes heavy, ex-
pensive, and hard to bear. The policy
holders should recognize this clearly as
an item of expense outside of the COM
pany'S control and as tax on their
individual savings, provision, and thrift.
Our tax bills amount to POS per cent
costs. including commissions to agents,
Office maintenance, and, in short, one
fifth of the total expense account"
1t is argued that life insurance COM
panies ought not to be taxed for the
purpose of making money for the state
treasury, but only for the purpose of
paying the legitimate expenses of in
surance supervision. The tax, it is as
serted. is added to the expense of the
policy, and 1t is Just that much addi-
tional burden placed upon the man
who is trying to make provision for his
family against his death, and If he is
taxed on his insurance in a way to
make money for the state, an unjust
burden is placed upon him.
There is something in this argument
provided the state is sufficiently able
to regulate insurance that it shall cost
the policy-holder no undue profit for
the company. But If the company or
it's officers make a considerable profit
out of the policy-holders. it does not
seem unfair that it should be taxed.
For instance, the state Of Kansas |
taxes insurance companies 2 per cent
on their gross business. in addition to
fees for agents licenses, examinations, |
and various other matters. This per
cent brings into the state treasury more |
than $500 900 a year, which goes into
the general revenue fund, while the ex-
pense of maintaining the insurance de- |
partment takes only small part of It. |
The balance is clear gain for the state |
treasury.
The question is, would the policy
holders be benefited If this tax were |
abolished? Would the rate of insur-
ance be decreased if this expense to /
the company were done away with, or |
would the policy-holders have to pay |
the same as they always have? When
this tax was levied, some of the old
line companies, at least, were managed |
with a lavish hand, as recent investiga
lions have shown. and the tax levied |
oy the state probably made no differ
snce to the policyholders. The ques
lion now is, are the companies managed |
so economically now and is supervision
10 strict, that the policy-holders would
De benefited by doing away with the |
AK? If so, the tax amounts to double
.axation, as the policy-holder pay on
heir assessed property also. But if the
AK comes out of the company's pro-
its and not out of the policy-holders,
t seems like a good thing.