The Waterbury Democrat., 1941-02-17
COMMISSIONER
 OF TAXES TALKS
Continued from Page D

public service corporation taxes would yield $7Oo.o00 annually. and the change in the base of insurance company taxes would give the state another $730,000 a year.
 Increase of Taxes
 Mclaughlin recommended an in- crease in taxes on express compan- ies of from two to thre per cent; on telegraph, cable and car com- panies of from three to four per cent; on telephone companies from four to five per cent; on companies furnishing, leasing or operating railroad cars of from three to four percent; and on water, gas, electric and power companies from one and one-half to two and one-haf per cent.
 The memorandum said these taxes "are intended to equalize rates of taxation as between public service companies and miscellaneous corporations engaged in manufac- turing and merchandising"
 "At present public service com panies are in a preferred position in that they are protected from com- petition by their franchises and are either ,as in the case of transpor- tation and communication com panies, allowed to deduct taxes paid locally from taxes paid the state or, in the case of water, gas, electric and power companies, subject to a very low rate on gross earnings one and one-half per cent"
 The memorandum stated miscel- laneous corporations must pay all local taxes on real and personal property and are not allowed to de- duct these taxes from their state tax and they must pay to the state a tax of two per cen on net earn- ings. including income from tax ex- empt securities, without deduction of interest and rent paid out.
 These companies are not pro- tected by franchise or otherwise from the sever competition of sim liar companies, both tntra and in- terstate. Moreover, manufacturing companies are exposed to recent war profits taxation on the part oi the federal government, while puD' lie service companies will experience less incraees in federal taxes from the new federal legislation"
 Mclaughlin said large insurance companies, by changes in their in. yestment portfolios, have increased their tax-exempt investment m- comes by 87 per cent between 1885 and 1888. Their tax-exempt income in 1885 was $9,725,696, Mclaughlin said. while in 1888 it increased tc $19,191 PAS.
 The commissioner said fire, cas- ualty and other insurance com- panies increased their tax-exempt securities 63 per cent during the same period.
 "This increase in tax-exempt n- come" the memorandum said, "has led to 8 corresponding dimunition in the taxes paid by insurance com panieS on investment income.
 Another Proposal
 Mclaughlin proposed to change the base of the existing insurance company tax to include income from tax-exempt securities by making the tax franchise tax measured by net premium income and net investment income flor the privilege of doing business in Connecticut"
 The $1,250 600 now paid the state by municipalities is a fixed assess ment based on the average collec- tons of thre years. By repeating this, the state tax department feels the benefits would react directly to real estate owners who have com plained to the past several admini- strations of the inequality" of the tax burden. Furthermore, the re- peal would enable communities to enjoy e lower local tax rate.
 Gov. Hurley was said to have ap. proved the tax departments pro- gram.