Evening star., 1937-04-25

age earnings shall be deemed to be
not more than per cent Of these
reserves. Third, there is tax OF 2
per cent on investment income from
funds representing capital stock and
surplus.
To quote briefly from this third tax
application, as an illustration Of COM
plications the bill would remove:
Such investment income shall, for
purposes of taxation under this act,
be arrived at as follows: Add the gross
assets at the beginning and end of
the calendar year and strike an aver
age. Add capital stock and surplus at
the beginning and end Of the year and
strike an average Ascertain the pro-
portion which the average capital
stock and surplus bears to the aver
age gross assets. Credit to investment
income on capital stock and surplus
such proportion Of all income, except
income taxed under this act, de-
rived from interest. dividends, rents
and profits on sales or redemption
of assets. Charge against invest
ment income on capital stock and
surplus such proportion of all losses
on sales or redemption of assets"
There would be substituted for this
and the other two tax formulas now
applied to marine insurance business
the levy of 2 per cent on net premiums
on risks written in the District. Just
how this change would affect the tax
receipts from marine business here
has not been computed exactly, but
it is believed there would be no very
great change in the total although
the taxes on some companies appar-
emily would 90 up and on others the
tax would be less.
In addition to the proposed re-
visions Of the taxes, the proposed new
bill would increase the license fees
except as to the marine companies,
which now pay single license fee Of
500 if the assets are less than
s1,O00,o00; or $50 if assets are be-
tween $l,000,00O and $4,000 900 and
5000 if assets are more than S5,000,0 ,000
The bill proposes that all insurance
companies entering the field here
shall pay a fee for certificate of
authority" or what may be called
an entrance" fee of S25. The similar
fee now charged to all but marine
companies is $40.
There would be an annual fee Of
$40 year for filing the annual
statements Of insurance companies.
The present similar fee is $40.
Any company issuing contracts Of
insurance here without having first
obtained license from the superin-
tendent of insurance would be made
subject to fine of $100 per day for
each day illegally engaged in business.
The bill provides that the proposed
2 per cent tax on net premium re-
ceipts shall be paid before March l
of each year on the receipts of the
preceding calendar year. Net pre-
MUM receipts are described as being
gross premiums received, less the
sum of the following: Premiums re-
turned on policies cancelled or not
taken; premiums paid for reinsurance
where the same are paid to companies
duly licensed to do business in the
District. and dividends paid in cash
or used by policy holders in payment
Of renewal premiums.
Any company failing to pay the tax
prescribed in the proposed act would
be held liable to the District for the
amount Of the tax plus a penalty of
per cent month until paid.
One of the arguments for applying
the proposed per cent tax on net
premiums to fraternal insurance COM
panies is that such associations are
business organizations though operat-
ing through fraternal bodies.
In the opinion of one expert the