It seems to me that if the appellee's contention is correct, then the State is collecting double taxation. The trouble arises from the use of the word "dividend." No doubt some master salesman of some insurance company must have conceived of the use of the word "dividend" as a sales proposition. Clearly, the insurance company is not paying its policyholder a dividend. It is refunding to the policyholder a small part of an overpayment of the premium which the company charged; that is all the so-called dividend is.
Insurance companies, for reasons unknown to the writer, have been permitted over the years to charge excessive premiums by using old mortality tables and by including excessive loading charges. The insurance company, to a certain extent, satisfies the policyholder by returning part of that premium. It may either pay it back in cash; it may apply it on the premium for the coming year; or it may be used in purchasing additional insurance.
Some argument is made that the alleged dividend is paid not only from the excessive premium charged but also from earnings other than the premium account. One need only look through the reports of the life insurance companies in America and he can come to no other conclusion than that all the poor policyholder gets back is a part of the excessive premium which he pays.
The refund, a so-called dividend, is nothing more nor less than a refund of part of the excessive premium charged. The state of Iowa receives a tax upon that premium. To permit it to levy an additional tax, as it now seeks to do, would be permitting double taxation. All of this tax comes out of the pocket, not of the insurance company, but of the policyholder, who is already charged an excessive premium by the insurance company. *Page 1387