Watertown weekly leader. [volume] (Watertown, Jefferson County, Wis.) 1906-1908, 1907-01-11
INSURANCE TAX
IS HELD UNJUST.
ZENO M. HOST SAYS NORTHWEST
ERIN MUTUAL LIFE INSURANCE
COMPANY PAYS TOO MUCH.
POLICY HOLDERS SHOULD ACT.
Advises Repeal of Law Requiring Insur-
ance Company to Pay Taxes on
Business Written.

MADISON, Wis, Jan. Al Special. /
Zeno NJ. Host. state commissioner of in
surance, in a letter to Judge George II.
Moves, general counsel of the Northwest
ern Mutual Life Insurance company of
Milwaukee, which was filed with the tax
commissioner today, says that that COM
pany is taxed too heavily and in an un-
just manner in this state. Mr.. Host
says that the Northwestern paid the
state in 1905 an amount equal to
gross premium tax of nearly Is per cent.
On a policy of $4,000 carried in the COM
pany the state annually receives a suf-
ticient amount in taxes to enable the
policy holder 20 carry an additional
$1,000 of insurance on the ordinary life
plan and have a balance remaining of
S155, or in other words, were the tax
charged direct to policy holders, and the
law repealed. the annual dividend on
$4,000 policy would be So a greater.
Home Company Badly Treated.
Mr. Host says that foreign companies
are far better treated in Wisconsin than
is the Milwaukee company. lie advo-
Gates q tax on the profit end of the bust
ness and believes that 4 tax on surplus
accumulation withheld from distribution,
would have a tendency to stimulate 4
larger and more frequent distribution
and so tend to reduce the cost of insur-
ance to the policy holder
Policy Holders Should Act.
The commissioner also favors the re-
peal of the reciprocal or retaliatOry laws
and he urges the adoption of laws pro-
viding for a rational, equitable and uni
form method of taxation.
He urges that every policy holder call
the attention of his member of the Legis-
lature to the unjust and eXorbitant tax
and endeavor to have the measure re-
pealed at once.
Mr.. Hosts letter to Judge Noyes is as
follows
Wisconsin Companies Singled Out.
Replying to your recent letter requesting
my opinion on the question of taxing the
surplus of life insurance companies in Wis
consin and also of the proposed form of
bill submitted by you to the Wisconsin tax
commission on the Sd inst.
The taxation of life insurance companies
in Wisconsin is peculiar and without meth
cd or uniformity. Wisconsin companies are
singled out and more oppressive taxes are
imposed upon them than any state in the
Union or any country in the world imposes
panieS.
With premium receipts on business writ
ten and in force in this state during 1905
amounting to 50, 429, 1922, the Northwest
ern Mutual Life Insurance company paid
in taxes to the state Of Wisconsin, the sum
of 5000 02112 an amount equal to gross
premium tax of nearly Is per cent. On my
own policy of $4,000, carried in the North
western, the state annually receives a Sutti-
cient amount in taxes to enable me to carry
an additional $1,000 of insurance on the
ordinary life plan and have a balance re-
naming of S1.55, or in other words, were
the tax charged direct to the Wisconsin
policy holders, and the law repealed, the
annual dividend on my policy would be
$32.2 "a greater
An Unjust Discrimination.
4 casualty company collecting the same
amount of premiums in this state would
havo paid as a license fee a tax of $iS,-
$3.50: as a matter of fact the forty-fOur
casualty and surety companies licensed i'll
lected in this state taxes amounting to 500
1875 for 1905, while the twenty-four as
this state paid nothing for taXes-the fees
for licenses amounting to S19O9. so, while
the premiums collected amounted to $276,-
639S2.
Fire insurance companies pay a gross
premium tax Of per cent, less amount
paid for reinsurance, return premiums and
actual losses paid in this state. which
amounts are deducted from gross premium
income before tax is computed. The North-
western Mutual Life Insurance company in
1903 paid for losses and claims in this state.
$1,0I6, 11194, but received no deduction ON
account of such repayment Of receipts.
Fraternal Societies Pay No Tax
The sixty-sevcn fraternal societies collect
ed S., 49S, J5S.O3 in Wisconsin during 1905
and paid nothing for taXes-the filing and
license fees for the siXty-seven societies
posed tax on these fraternal organizations
would have increased the cost of the protec-
ton furnished to just the amount of such
tax, just as the tax has increased the cost
of life insurance to the policy holders of
the Northwestern Mutual Life Insurance
company, since the amount paid for taxes
an11I1 han t1Tn Oh in, Il iY-fI r.,
decrease the cost to each policy holder.
Add to the many companies and associa-
tons exempt from taxes, the many town
and village mutuals, and there is in Wiscon-
sin an aggregate of about 400 companies
and associations for which the law imposes
no tax, and under the laws of Wisconsin
not one of these is more mutual in the con
duct of its business than is the Northwest
ern Mutual Life Insurance company.
| do not advocate a tax for these purely
mutual experimentation of them being
made only to emphasize the lack of method
and uniformity in the Wisconsin tax inn
positions.
Tax Profit End of Business.
For life insurance companies however, L
do favor the imposition of taxes on the
profit end of the business" as advocated in
the brief submitted by William A. Fricke
at the hearing before the state tax COM
mission December ), 1906.
a tax on surplus accumulation withheld
from distribution, as advocated in your pro-
posed bill, would have n tendency to stimu-
late q larger ana more frequent distribution,
and SO tend to decrease the cost of life in
Surance to the policy holder while ON the
other hand, the surplus distributed or re-
turned would still constitute taxable prop
erty.
A gross premium tax of . per cent on
notwithstanding premiums would give TO
the state q larger revenue than a $500 adj
ditional license fee, and would tend also TO
make the taxes imposed more equitable and
uniform and being placed upon the pre-
MUM of contracts issued for profit would
constitute as just a tax as is now imposed
on fire, casualty and surety premiums.
Favors Uniform Tax.
While l favor the repeal of the reciprocal
or retaliatory law as recommended by the
insurance investigating committee, such re-
peal in Wisconsin can have no effect on the
retaliatory tax impositions on Wisconsin
companies unless the same law is repealed
in all other states, which may not be ac-
complished for many years to come. The
repeal of the Wisconsin retaiatory law is n
proper measure, but should be supplement-
ed by such a rational, equitable and uni
ton of similar taxes and fees in other
states cannot lnJuriouSly affect the inter
ests of policy holders.
Urges Policy Holders to Act.
In the meantime, l know of no more eff
fectiye means to secure the much hoped for
and proper solution of this life insurance
tax question than to have the attention OF
every Wisconsin policy holder directed to
mept Of this tax. # every Northwesttef.n
policy holder in this state viii just figure
what nearly Is per cent. of his annual pre-
MUM in state taxes means, and Will then
call the attention of his member of the