The Pensacola journal. (Pensacola, Fla.) 1898-1985, 1913-05-11

panies from the tax. i$sVG~N@N
And the public, having been gulled
often in the past by the insurance COM
panies, is swallowing this latest bunk
Of the insurance kings, and many let
tiers Of protest are being received by
congressman.
A little analysis of insurance finance,
however, shows how ridiculous Is this
threat of the companies to pass the
income tax along to the policy holder.
They will no more think of doing it
than they will of closing up their af-
fairs because their incomes will be
taxed.
For many years the insurance com
panies maintained the fiction that the
dividends" paid to policy holders an
nually were actual dividends Divi-
dends were the bait he'd out by the
companies to attract business. The
agents and advertising literature told
of the wise investments and economi-
cal management of the companies
which enabled them to permit policy
holders to share in the profits. Thou
sands of people believed this, and in
sured themselves in the companies
paying the highest dividends.
Then congress passed an excise law
taxing dividends of corporations. At
once the insurance companies asked
for exemption. Their dividends to
Policy holders. they explained land
truthfully this time), were not divi-
dends at all. They charge the policy
holder too much for insuring him $50
per cent too much is the exact figure),
and they each year graciousiy return
gart, but not all, of this overcharge
end call it a dividend.
The government, however, decided to
"a nix 81 Cd o6
word, and imposed on their net profits
out of which they declare dividends
the one per cent excise tax, which by
the way, was never passed along to
the policy holders.
The Underwood bill simply substi-
tutes for the one per cent corporation
tax one per cent income tax. And
the companies are trying to brighten
their policy holders by telling them
they will have to stand this tax in re-
duced dividends
Is this threat likely to be carried
out? The New York insurance inves-
tigation showed that in 1907 the in
surance companies earned net $685.
10000 on a capitalization of only $780,
600, 900, or 657 per cent-in one year
This profit was genuine, and 1t was
paid in genuine cash to the insurance
Stockholders far different dividend
than the one paid to policy holders.
The Aetna has earned as high as 166
per cent in a year on it's capitalization,
the Prudential 219 per cent. the Metro
politan lao per cent, and so on. More
over, the insurance companies have
heaped up vast reserve fund which
Is commanded by the Wall street
financiers as an admiral commands a
feet.
Out of their tremendous profits, the
insurance companies could well afford
to pay actual dividends TO policy hold
ers, besides charging 80 per cent less
for insurance. The size of the divi-
dend is the insurance company's best
advertisement.
Do you suppose for an instant the
insurance companies intend to partial
1y kill the public goose that lays the
golden Wall street egg by cutting
down policy holders dividends by the
amount of the income tax. with a re-
suftant loss OF highly profitable bust
ness?
Says Representative Cordell Hull.
author of the income tax biz: TT is
not believed by any person familiar
with the facts that any OF the one per
cent tax will fall on the policy holders"