New-York tribune., 1906-12-11
STATE INHERITANCE TAXES.

The recess committee of the Massachusetts
Legislature. which is revising the taxation sys-
TEN of that state, will, 1t Is understood, recon-
mend an enlargement of the states inheritance
tax plan Massachusetts has collateral
Inheritance tax of 8 per cent on inheritances
over $500. 1t is not unlikely that the revised
system will provide for direct inheritance taxes.
The more recent tax enactments, especially in
the Western States contain both direct and in
direct inheritance taxes, and generally in
graduated form. California passed very thor
oughgong law OF this sort last winter Direct
inheritances are taxed at l per cent under
$4,000 and over $4,000 Except In case the heir
is a widow or minor child when the minimum
is 100000, at IA per cent between $4,000 and
$4,000 at 2 per cent between $4,000 and $780,,
OOO at pa per cent between 100000 and
100000. and at 3 per cent over $5000OO Col
lateral inheritance taxes are graded according
to nearness Of kin as well as amount, but in
the remotest degree the rate rises with the
amount Of the inheritance from 3 to - per
cent Fifteen per cent Is a heavy tax, but it
applies only to bequests to strangers or very re-
mote kindred, and then only to the excess Of the
bequest over SJOO,OO0. California's system is an
illustration Of what is meant by a graduated
Inheritance tax on both direct and collateral
inheritances.
Most of the states derive some of their rev.
only upon collateral inheritances. Sixteen
states have direct inheritance taxes but only
three Of these in the graduated form like Cali
fornla's tax. Sixteen states have only collateral
Inheritance taxes several Of these possessing
the graduated feature The system Of nheri-
tauce taxation is so firmly established among the
states and the states derive such large amounts
from ii that it is doubtful If they will be will
ing to relinquish that source Of revenue to the
{vT1o-
probably meet with opposition from the states,
for all of them are looking for additional
forms of taxation and not abandoning any rev
enue producing system they already have New
York receives about S5,OOO,OO0 a year In inner
jtance taxes If she should cease taxing inher-
itances in order 10 leave that field Of taxation
10 the nation. she would not know which way
70 turn TO make up the deficit in the revenue.
If there ever is a national inheritance tax it
will probably be in addition to the inheritance
taxes already levied by the states.
One great advantage which would come from
national system, If the states should surrender
this form Of tax, would be uniformity The
present system is so confused that inheritances
are often taxed in two more states The
Boston Transcript calls attention to this con-
fusion, and suggests that a conference of the
states should be held TO secure uniformity and
put an end to overlapping taxation The stock
VI q A1deSdtuuSelLS QeIQ DV g. C1ClZen
Of New York is taxable both in New York and
Massachusetts. The Transcript gives an ex-
ample Of the way this works. It says:
Suppose citizen Of Maine transmits to COL
lateral heirs stock in the Boston g. Albany
Railroad, what would be the levy that part
OF his estate? II would be taxed 1 per cent In
Maine. 3 per cent in Massa achusetts and in New
York that fraction Of per cent represented by
that states proportion Of the mileage of the
Boston & Albany road.
If in addition 10 all Of this q federal tax were
levied the Inheritance would be overburdened
with taxation. Clearly, if there is to be fed
eral Inheritance tax, and if the states at the
same time remain in this field Of taxation, some
system must be devised by which there will
the federal tax.
Some states have put the rates upon collateral
inheritances very high. The maximum rates
are - per cent in California North Carolina
and Wisconsin, Il per cent in Washington, and
10 per cent in Louisiana. South Dakota and
Utah. IF a citizen of California should leave
large block OF the stock of n Wisconsin corpora
ton 10 a collateral heir, California and Wiscon-
sin could each collect 10 per cent on the inher
itance- If the Wisconsin corporation happened
TO be incorporated also under the laws of one OF
these other states having a high collateral in
heritance tax, that state, too could collect its
10 or II per cent on the same transaction
An additional federal inheritance tax of the
same radical sort would eat up most of the
Inheritance. The supposed case is extreme. but
1t shows the possibilities OF the present I'M
systematic and overlapping state taxes.