Newark evening star and Newark advertiser. [volume] (Newark, N.J.) 1909-1916, 1913-02-03
EXPLAINS PURPOSE !.
Of INSURANCE BILL.
City Counsel Nugent Says Pol
icyhoIders VIII Not Be
/ Taxed.
REPLIES TO STATEMENT
OF PRUDENTIAL HEAD.
Companies Will Be Entitled to
Less Exemptions Than I'm
der Present Law.

life assurance companies in this
State should it became a law, viii
not subject to taxation the funds APP
portioned 10 deferred dividend policy
holders, and will not result in the
taxation of any funds set aside for
the benefit of policyholders.
city Counsel James r. Nugent in n
statement today outlined the effect
OF the bill particularly on the Pl'u-
Dental Insurance Company. The
main purpose OF the bill, according
to Mr.. Nugent, is TO reduce the
amount of exemptions which the COM
panles may offset against the amount
and value of their property. Refer
ring to the statements made by Presi-
dent. Forrest r. Dryden, of the Prn-
Dental, to the rolieyholders, that the
policyholders would be taxed, Mr. Nu-
gent characterized them as sabso-
utely misleading
The statement, which is addressed
to the members of the Senate ana
Assembly, is in part as follows;
This bill amends the present law
relative to the taxation OF life assur-
ance companies in this State, but IT
changes it only in this parucnlar'
namely, that the companies under TINS
bill will be entitled to less exemptions
than they are entitled to under the
present law. The bill does not subject
10 taxation the funds apportioned to
deferred dividend policyholders; 1t
will not result in the taxation of any
funds set aside for the benefit OF
policyholders.
THE statements made in the ciReu-
lar issued by Mr.. Dryden to the de-
ferred dividend policyholders OF the
Prudential Insurance Company OF
America, dated January Il. 1918, and
the assertions in the statement OF
facts relative to Assembly bill No. 81,
issued by Mr. Dryden in the form OF
a printed folder, in so far as they seek
to snow that under the provisions Oh
this hill the policyholders of TINS
company will be taxed, or that any
funds set aside for the benefit OF the
policyholders will be taxed, are ap-
solutely misleading.
"Under the present law providing
for the taxation of life assurance
companies, p L. 1906 p. AIS, life as
surance companies are taxable upon
the full amount and value of their
property. excluding therefrom their
real estate otherwise taxed ana
five hundred thousand dollars in val
ne of securities held by the COM
panies, and further deducting the
debts and liabilities of the companies.
! The law further provides that the
! companies shall be entitled to a de-
IL
duction for their liabilities on poll
| cies from the amount or value OF
their property, of the value OF the
policies. and not the gross amount
insured thereby, as such value shall
/ be ascertained by the computation of
the same by the commissioner Of
banking and insurance of this state
by such standard of valuation as
may be adopted by him at the time
such computation is made.
Companies Pay Tax.
"The Supreme Court and the Court
of Errors have decided that the
commissions Of banking and insur-
ance, in making such computation
of present values, may include there
in not only the legal reserve, that
! is, the amount needed to secure the
payment of the face of the policies
! at maturity, but also the funds held
by the company under Chapter II,
Laws of 1907. TO meet and pay the
/ dividends on deferred dividend poll
cies declared by the company in ac-
cordance with the terms of the poll
cies. The companies are taxed ano
4lA .nlf r11ntr IfaT-es
They are taxed upon the amount OF
value of their property less deduc'
lions allowed by law, and the tax is
levied against and paid by the com
pany out of its surplus upon the ne
amount of its assets. that is, the
amount or value OF its property re
naming after deduction of the eX
emptions allowed by law. and thi!
tax is levied against and payable b!
the company ITSELF and not by thu
polcyholders.
I'm the case of stock companies
ii may affect indirectly the stock
holders of the company because thu
tax will, to the extent thereof re
duce the surplus which is the prop
erty of the stockholders and not o
the policyholders, but it cannot il
anywise affect the policyholders.
1.-THE main purpose of this bill, Nc
81. is to- reduce the amount of eX
emptions which the companies ma
offset against the amount and valu
of their property, and thereto to in
crease the amount of net surplu
subject to taxation. Under this bi
4 },
entitled to deduct as liability o
policies the reserve held to insur
the payment of the face of the poll
cies at maturity, and will not be er
titled to deduct also, as a liabilit
on policies, funds held under chapte
II, laws of 1907, to secure the pay
ment of dividends upon deferred div
dend policies. 1t so happens that thi
I'LL will affect especially the Pruder
tial Insurance Company for She res
u son that the Prudential InsuranC
Company is, | understand, the onl
or principal company of this Stat
S that has issued and has now in fore
: these deferred dividend policies tt
= Prudential Insurance Company Ia
r not issued any Of these deferred pol
. cies since 1907, but it has now {
0 hand i very large fund set asiC
: since 1907, under the provisions
b chapter n, laws of 1907, to meet 81
: secure the payment of dividends d
: elared from time to time upon d
!, ferred dividend policies issued pri
!. to 1907. Life assurance scompani
n being taxable upon the total amou
5 and value of their property, the on
: question as to the merits of the b
: is. whether or not the liability
:, the company as to the deferred div
:, dend fund is such liability al
h debt as should be allowed it as a d