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other moneyed capital in the hands of individuals citizens' refer to the entire process of assessment, which, in the case of national bank shares, includes both their valuation and the rate of percentage on such valuation; consequently, that the act of Congress is violated if, in connection with a fixed percentage applicable to the valuation alike of national bank shares and of other moneyed investments of capital, the State law establishes or permits a mode of assessment by which such shares are valued higher in proportion to their real value than is other moneyed capital.

"2. That a State law which permits individual citizens to deduct their just debts from the valuation of their personal property of every kind, other than national bank shares, or which permits the taxpayer to deduct from the sum of his credits, money at interest or other demands to the extent of his bona fide indebtedness, leaving the remainder to be taxed, while it denies the same right of deduction from the cash value of bank shares, operates to tax the latter at a greater value than other moneyed capital." 14

§ 584. Moneyed capital.

The "moneyed capital" intended is capital employed in banking or similar financial business. Bank stock need not be taxed in the same way as mercantile capital. "The main purpose of congress in fixing limits to state taxation on investments in the shares of national banks, was to render it impossible for the state, in levying such a tax, to create and foster an unequal and unfriendly competition, by favoring institutions or individuals carrying on a similar business, and operations and investments of a like character. The language of the act of congress is to be read in the light of this policy." 15 Therefore where by the State law bona fide debts are to be deducted from credits, there is nothing contrary to the act of

14 Harlan, J., in Boyer v. Boyer, 113 U. S. 689, 28 L. ed. 1089.

15 Matthews, J., in Mercantile Bank v. New York, 121 U. S. 138, 30 L. ed. 895.

[Chap. XXIV. Congress in holding that shares of stock in a national bank are not credits, and that the debts of owners of the stock are not to be deducted from the value of the stock.16 And this would seem to be the only sound interpretation, since a share in a corporation is not a debt of the corporation. In Iowa, however, it has been held that a share is a credit, and the owner is entitled to have subtracted from the value of it the amount of his bona fide debts.17

The business of a trust company is not that of banking, and shares in such a company, it is held, may be taxed differently from those of national banks.18

§ 585. Taxation of State banks.

Where State banks are specially taxed, it is usually done in substantial conformity with the national banking law; the shares being taxed to the owner, at the place where the bank is. 19

In Quebec foreign banks pay a tax based on the capital, and an additional tax of $100 for each agency in Montreal and Quebec, and $20 for each other agency.20 Similar provisions exist in other Provinces.

Under the Wisconsin act it was held that the real estate of a banking company is assessed to the corporation, and no deduction is made on account of such taxation from the value of the stock.21

16 Commercial Nat. Bank v. Chambers, 21 Utah, 324, 61 Pac. 560, 56 L. R. A. 346.

17 First Nat. Bank v. Abia, 85 Ia. 736, 52 N. W. 334.

18 Jenkins v. Neff, 163 N. Y. 320, 57 N. E. 408.

19 Ariz. Rev. Stat. § 3838; Mich. Comp. L. § 3831; Miss. Code, § 3764; N. Mex. Comp. L. § 259; Wis. 1903, ch. 72, § 2.

20 Que. 1895, ch. 15, amending Rev. Stat. Art. 1145.

21 Second Ward Sav. Bank. v. Milwaukee, 94 Wis. 587, 69 N. W. 359.

CHAPTER XXV.

TAXATION OF SPECIAL CORPORATIONS: INSURANCE COMPANIES.

591. Scope of the chapter. 592. Tax on receipts.

593. Discriminating tax on receipts against foreign companies.

594. Combination of ordinary tax

and tax on receipts.

591. Scope of the chapter.

$595. Combination of tax on re-
ceipts and license fees.

596. Taxation of insurance com-
panies in New York.
597. Retaliatory taxes.

• The special forms of taxation of insurance companies, both domestic and foreign, are matters that fall rather outside the scope of a general treatise. No effort will be made in this chapter to assemble the taxation laws of all the States on this subject. It has rather been the object of the chapter to give the laws of certain important States, with types of other State laws, in order that the reader may obtain an idea of the ways in which such corporations have been taxed.

8592. Tax on receipts.

The commonest form of taxation of insurance companies is the levy of a certain percentage of the gross receipts from business done within the State by both domestic or foreign insurance companies. This tax is in some States one per cent. of the gross receipts;1 in some one and a half per cent.,2 two per cent., or two and one-half per cent."

The percentage is sometimes levied on the net receipts; thus two and a half per cent. of the net receipts deducting losses

1 Ala. Civ. Code, § 3917.

2 Dist. Col. Code, § 650; Ut. Rev. Stat. § 419.

3 Col. Stat. § 2212, amended 1895, p. 195, § 2; Minn. Stat. § 3192; Vt. Stat. § 579.

4 N. Dak. Code, § 3127a; Wyo. Rev. Stat. § 1770.

and commissions; 5 two per cent. deducting losses and premiums returned." In New Mexico the net receipts are taxed "at the same rate that all other personal property is taxed." 7 A similar method prevails in Oklahoma.8

In Rhode Island each domestic insurance company pays two per cent. of the gross premiums and assessments received within the State or within any other State which has not taxed the company; and a foreign insurance or surety company pays two per cent. of the gross premiums and assessments received within the State."

In Quebec the tax is one per cent. on premiums of life insurance companies, of one per cent. on premiums of other insurance companies, but in no case less than $250.10 In Ontario the tax is the same; but where a foreign life insurance company has $100,000 or more invested in the Province and less than $20,000 receipts it shall pay one per cent. on its gross premiums and one-fourth of one per cent. on its income from investments.11

In several States the tax on receipts is in lieu of all other taxes, State, county or municipal. 12 Often this is subject to exception; as, except taxes upon real estate and license fees for agents; 13 except taxes upon real estate, license fees, etc.; 14 except license fees and taxes on real estate for all corporations, and taxes on personal property within the State of foreign corporations; 15 except taxes on real or personal property and license fees.16

5 Ark. Stat. § 4123.

Ida. Rev. Stat. § 2233.

7 N. Mex. Comp. L. § 2131.

8 Okl. Stat. § 3054.

R. I. Gen. L. ch. 29, §§ 5, 6.

10 Que. 1900, ch. 13.

11 Ont. 1899, ch. 8, § 2.

12 Ark. Stat. § 4123; Ont. 1899, ch. 8, § 6.

13 Dist. Col. Code, § 650.

14 Ida. Rev. Stat. § 2233.

15 Minn. Stat. § 3192.

10 Wyo. Rev. Stat. § 1770.

In Utah it is provided that if any insurance company shall have paid a property tax during the year covered by said report, it shall be entitled to deduct from the tax herein provided the amount of such property tax paid for general State purposes. 17

§ 593. Discriminating tax on receipts against foreign companies. In several States a discrimination is made between the rate of taxation on receipts paid by domestic and by foreign companies. Thus in Iowa insurance companies incorporated outside the United States pay three and one-half per cent. on their gross receipts; within the State companies of other States pay two and one-half per cent. on such receipts; while Iowa companies pay one per cent. on their receipts deducting amounts paid for losses and premiums returned.18 This act, it is held, is not obnoxious to the constitutional provision for taxing the property of corporations like that of individuals, for the tax is not one upon property, but a franchise tax for the privilege of doing business in the State.19

In Kansas domestic companies pay two per cent. on their gross receipts and foreign companies four per cent.20

In Massachusetts domestic insurance companies (except life insurance companies) pay one per cent. on gross receipts; but premiums received in other States where they are subject to a like tax shall not be so assessed.21 Similar companies chartered in other States pay two per cent. on their gross receipts.22 Similar companies chartered outside the United States pay four per cent.; "provided, that when the tax commissioner is satisfied that any such company has, during the whole term for which the tax is to be assessed, kept on deposit with the

17 Ut. Rev. Stat. § 421.

18 Ia. Code, § 1333.

19 Manchester Fire Ins. Co. v. Herriott, 91 Fed. 711; Scottish Union & N. Ins. Co. v. Herriott, 109 Ia. 606, 80 N. W. 665, 77 A. S. R. 548.

20 Kan. Gen. Stat. §§ 3585, 3587.

21 Mass. Rev. L. ch. 14, § 26.

22 Ibid. § 27.

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