Montgomery County sentinel. [volume] (Rockville, Md.) 1855-1974, 1913-05-09
NO INCOME TAX ON LIFE INSUR.
ANCE FUNDS.

An explanation that the pending in
come tax section Of the tariff bill does not
propose to lay burden upon the proceeds
Of life insurance policies paid upon the
death Of the insured was made by Repre-
sentative Cordell Hull. Of Tennessee, Demo-
cratic member of the Ways and Means
Committee, who wrote the income tax
paragraphs. In his statement Mr.. Hull
declares that life insurance companies are
misrepresenting the facts in thousands of
circulars sent out to polcy-holders.
Mr.. Hull says the government proposes
to tax the large earnings of insurance
companies and does not propose to touch
the premiums or policies. The statement
is as follows:
THE pending income tax bill does not
in any sense propose to place this tax upon
the proceeds Of life insurance policies paid
on the death Of the insured nor upon the
return of the principal invested in life in
surance in any manner during the life of
the person making the investment for
business purposes.
This would apply to endowment and
other policies under the operation Of which
portions Of the principal invested therein
would be returned to the investor during
his life. The proposed tax would. however,
apply to any actual gains or profits arising
from such investments and return either
separately or along with any portion of
the principal from time to time, just as
interest upon the loan Of money which
might be paid to the lender separately or
which might be included with a payment
Of the principal. An actuary would de-
termine whether any actual gains accrue
with respect to these insurance trans
actions. II not accruing therefore the tax
would not apply in any sense.
Some Of the large companies, which
have amassed in the neighborhood Of half
billion dollars assets and which derive
large profits annually from savings in ex-
penses, from savings in mortality. and from
excess interest earnings in addition to the
amounts received from premium payments
made by policy-holders, are seeking to have
these net profits in bulk exempted from the
proposed nominal tax of per cent. per
annum.
"0f course, we all feel kindly toward in
surance companies. and especially toward
all policy holders. and would under no cir
cumstances do them an injustice, and from
my investigations can find no theory even
under all the facts by which holders
would be in the least affected. Most Of
these companies have always represented
TO the public and to the policy-holders that
they declare periodical dividends Of sur
plus, etc, and were not simply making a
return of premium savings or premium
overcharges.
1T has always been pictured to the
public that these companies were making
large profits each year from the source
that have mentioned. out Of which policy
holders receive annual dividends. How
ever, when the government proposes
per cent. tax. not on the policy-holders.
but on the aggregate profit Of the corpora
ton, the companies then abandon the rep
reservations made to the public and set
up the contention that they were simply
making returns Of premium savings to
policy-holders. These companies have
sent out circulars which consider mis-
leading. and whatever the intention, the
effect Of which is to unnecessarily alarm
and excite the apprehension Of the policy
holders"