The Bennington evening banner. (Bennington, Vt.) 19??-1961, 1909-09-27
TAX ON LIFE INSURANCE
Plan of President j. A. DeBoer of
National Life

Montpelier, president of the National
| Life Insurance Co, advocated uni
form state tax of one per cent on the
gross life insurance premiums col
lected within each state.
Mr.. DeBoer spoke in part as fol
| lows:
This paper will deal exclusively
with taxation of level premium life
insurance companies, giving no con
sideration to fraternal associations
building loan societies or assessment
concerns. Such a company
in order to maintain it's working as
sumptions and all the requirements
imposed by law in the calculation OF
its liabilities and solvency from year
to year, is compelled to secure a pro-
per volume of new business in order
, to maintain the averages of both the
natural and economic laws to which
Its guarantees stand related.
This usually compels the company
to regard an interstate business as
essential to permanency of experience
apart from any natural desire To dis
| tribute its services as broadly as pos
sible. In other words, the
company to which this paper relates
represents an institution of life in.
surance founded upon the most exact
| ing actuarial science and directed by
all the requirements of laws, without
regard to their character or variable
ness, as now existing in the different
! insuring themselves.
THE main argument advanced
against taxation of the life company
is that the policyholder pays the tax.
the inference being that, if the policy
holder understands this fact, he will
combine with his associates every
where and destroy all laws now tax
ing the business.
II have always held TO the reverse
OF This proposition, believing rather
that his sole question would be one
of square, uniform, equitable and
responsible deal in the matter and
not one of how to break down utter
ly what many states now look upon
as sure source of revenue. The
policyholder pays for everything, the
risk, expense Of management, taxa.
ton. publicity, state supervision,
stock dividends. either out of his pre-
miums or out of interest derived
from the investment of their re
serves
He is practically more interested
(and most Interested in the net
costs otherwise Of his life insurance
service and its rer' aiatv of perfor
nance than in these incidental mat
ters Of taxation and fees. so that it
is not to be expected that any cure
of existing evils can be hoped for
from that source Supervision itself
must supply it.
THE argument that life insurance
conserves the production of wealth
and renders II more constant haa
been made the basis of a claim that
il should not be taxed as represent
ing a higher form of state and nat
ional cooperation. However sfgnif
icant and true this statement is, II
cannot dispose of the average legis
lative idea that concrete wealth, TO
whomsoever belonging or from what
ever source derived or for whatever
purpose held or disbursed, should
bear It's share in the burdens of gov
eminent
There is much merit in the CLAIM.
that so much of the premium as dir
ectly or indirectly enters into the pay
ment of death losses should not be
taxed.
zone solution of a just life insur
ance taXation has been offered by an
official of large experience and an I'M
usual reputation in his business. He
suggests that all the annual preini-
ums, new and old, received within a
given state be decreased by the costs
OF insurance. by commissions TO its
by death claims, by dividends
by new investments in real estate.
bonds of railroads. and OF
other companies, and that the balance
be taxed at rate comparable with
taxes upon other property.
This brings examination of the
subject up to the question of the
views held by state officers in charge
of its supervision. There have been
current expressions on the subject by
life insurance commissioners dating
no further back than May last FIX
pressions from Southern and Western
states dominate because their officer
have of late been unusually active in
directing life insurance thought. Tax
alton has been agitated everywhere,
however. during the last four years.
The substance of these discussions Is
practically covered in the course of
this paper because essential to any
correct consideration of the subject.
=
This summary indicates that life
insurance may not hope to escape
sofle form of taxation, that the chance
of uniform treatment is remote and
that the serious added question has
arisen of co-equal rights in life insur-
ance as a subject of taxation between
the federal government and the states
=
THE gradual evolution of profes-
sional opinfon in favor of this conclu-
sion also represents the gradual ad-
mission that the state does and may
Justly regard the vast assets in poss-
ession and their influence upon the
economic problems of the times, the
of corporate and stock
control and the Indispensable need
of conserving the scientific hypothesis
upon which the business is organized
and works.
..In connection with discussions or
certain proposed tax bills in Wiscon-
sin. upon the reserves as a basis, the
following points were presented:
That the abuse of state regulation is
insignificant in comparison with the
abuse of taxation; that life insurance
does not create but simply exchanges
and distributes wealth; that the his
tory of life insurance taxation consid-
ers there is no marked difference be
tween a tax on life insurance savings
banks and building loan associations;
81, r1.aryoc hroalyc