The Washington herald., 1909-03-14
RAISES STATE RIGHT
Federal Inheritance Tax May
Breed Much Trouble.
SCENTS ECONOMIC DANGER
Wall Street Journal Suggests that
when Commonwealth Gets Through
Little Is Left to the NatiOn-ThinI1S
oliver Bill Would Drive Capital
from the Empire State.

The Wall Street Journal takes a pessi-
mistic view Of the proposed inheritance
tax. Its editors think a States rights
question will be raised, difficult to dis
pose Of. On the generaI subject the Jour
nal says:
A very delicate question Of States
rights is raised by the proposal Of the
new President to impose a Federal inher-
itance tax. II must be confessed that
after California and Idaho have taxed
large estates bequeathed 10 distant rela-
tives at Is per cent, and Iowa at 20 per
cent. anything further imposed by the
Federal government would look like con-
fscation. Even now there is a collateral
inheritance tax in New York State Of 5
per cent.
The Albany Proposition.
Probably no one viii take seriously the
graduated Inheritance tax introduced by
Assemblyman Oliver at Albany. Although
he is the leader Of his party in the lower
house, the measure could not pass with
out the consent of the Republican lead
ers. who have probably plans OF their
own and are likely 10 consider also the
feelings Of Washington in the matter
Apart from this. the Oliver bill contains
some manifest impossibilities. Of which a
tax Of > per cent on gifts made at any
time during the five years preceding the
death Of the deceased is perhaps the most
absurd. The recovery Of butter from
dogs throat sounds easy by comparison
There is no question OF the right Of
the States 10 impose inheritance taxes
and the custom ali over the world is one
Of considerable antiquity Up 10 a COM
paratively recent date in Great Britain
real estate escaped. largely because the
most important part Of il was in the
hands Of members Of the House Of Lords.
who naturally looked at the proposition
from their own point Of view. But heavy
death duties, in fact. have only devel-
oped within recent times. and especially
those imposing a graduated rate accord
ing 10 the size Of the deceased estate.
Taxes Of 10 per cent upward are. in
fact. so modern that the world has not
yet secured sufficient experience Of their
operation to see their most serious eco
nomic danger. II has been pointed out
here before that the tax is collected from
national capital, and Is spent upon cur
rent expenses. In England three deaths
in a family in quick succession would nee
essarily mortgage an estate to an extent
which would leave the fourth heir per-
manently crippled.
Would Justify Court Interference.
To impose such a burden IN order TO
spend the proceeds upon old age pensions
would. If it were paraileled by one Of our
public corporations. Justify interference
by the courts 10 protect the stockholders
The virtual life tenant Of the real es-
tate is compelled to burden it in order
70 pay the tax. His floating capital is
taken from him and the whole proceed
ing amounts in effect 70 eating I'D the
seed corn. There would be something 10
be said for the tax If its proceeds were
devoted to reducing national debt or for
legitimate national capital expenditure.
but a very few years is likely TO show
the states OF Europe that the higher the
tax is raised the less can be collected
from IT, Taxable capital simply moves
elsewhere, If It is In a liquid form; and
the indueement 10 improve property
which cannot get away is seriously re-
duced
In the State OF New York certainly any
such ratio as that proposed IN the Oliver
bill would have the effect Of driving all
the capital out OF the State which could
for this as for other indefensible taxes
ii that II can be easily collected. Even
this may be disputed. but the immortality
OF such an excuse does not seem 10 strike
the friends Of inheritance taxation.