New-York tribune., 1910-06-21

| the bill provides for what Is called a
| method of taxation has, ] believe. the sup
| port Of sound economists and or intelli-
gent public opinion.
| The objection lies to the method of gradu-
alton. The progressive rate appears to de-
pend not upon the amount of property or
| interest received by the individual trans
ferree. but upon the size of the whole es-
| tate passing to those who are not exempted
from the provisions of the law.
AS the law stood prior to 1892, the Court
| of Appeals held that the aggregate amount
of the estate should not be considered in
determining whether a tax should be i'm
posed but instead the specific share passing
! to the individual transferee. But In the
revision of 1892 the word property" was
defined to mean the property passing or
| transferred. not that portion of it received
by an individual transferee, thus making
the limitation of the statute apply to the
aggregate value Of the property transferred,
not to the separate value of each several
transfer"
Definition Not Changed by Bill.
This definition is not changed by the bill
to which have referred and it would seem
| that the sections relating to the proposed
graduated tax must be construed accord
ingly.
The bill provides that the tax imposed
with respect to collateral relatives and
strangers shall be per cent of the value of
the property does not exceed 100000;
per cent # It exceeds 100000 and does not
exceed s250,0oo, and 10 per cent If 1t ex-
ceeds s25o,10 In the case OF those within
Section 221 Of the tax law, including father.
mother, husband, wife. child, brother and
sister the tax of l per cent is imposed II
the property is of the value of $4,000 or
more and does not exceed 100000, per
cent If it exceeds 81 90, 900 and does not ex-
ceed s250,000 and per cent if it exceeds
$3.50, 900.
Hence, under this bill it would seem that
persons who stand in the same relation TO
two decedents and receive legacies of pre-
csely the same amount will pay inner
itance taxes at different rates, according II
the size Of the estate left by the decedents
respectively. This method of graduation
has been condemned as opposed to sound
policy.
Our present law, having no system OF
graduation, but distinguishing merely be
tween those intimately related to the de-
ceased and collaterals and strangers. does
not evoke the sense of injustice as would
inevitably the new system
The objections to such a system are
forcibly stated in the opinion Of the
United States Supreme Court in the case
of Knowlton agt- Moore G7S Z. S., p. 16)
denying the contention that the rate of
tax under the federal war revenue act Of
1898 was measured by the whole estate.
With respect to this contention the court
said:
In other words the construction pro-
0rI- ion 1at
intended to tax the separate legacies, not
by their own value. but by that OF a
wholly distinct and separate thing. ing But
ciple underlying the asserted interpreta-
tion is that the house of A which is
worth only $1,000, may be tSaed az but fha5
by attrbuting to AS house the value of
B's house, which may ri be worth nun uIi
ties which must inevitably result from
the admission of this theory are readily
illustrated. Thus person pneGo dying lying and
to a hospital $4,000. The rate of tax
would be per cent and the amount OF
Another person dies at the same time.
leaves an estate of s1.oe0,0oo and bequeaths
$4,000 to the same institution. The ratio
of taa UPu6 o 6e be tax FL To1d aad hns
ccme to pass that the same person, occu-
pying the same relation, and taking IN the
same character two equal sums from two
different persons, would pay in the one
case more than twice the tax that he would
in the other. In the arguments of counsel
tables are found which show how inev1ta- |
BILE and profound are the inequalities which |
the construction must produce. Clear as IS |
only serve to multiply instances afforded by |
the one example which we have just given. |
It may be doubted by some, aside from |
express constitutional restrictions whether |
the taxation by Congress of the property |
Of one person, accompanied with an arbi- |
trary provision that the rate OF tax shall |
hn rAfe to % rI1,
property of another, thus bringing about |
the profound inequality which we have |
noticed not would not transcend the lin
tai conceptions Of free government |
which underlie all constitutional systems. |
On this question. however in any Of its
lon, as no occasion for doing so exists |
since; as We understand the law, we are
clearly Of the opinion that II does not sus- |
tain the construction which was placed on |
1t by the court below.
The propriety of a progressive inher |
itance tax is abupdantly supported by the
report of the special tax commission of this
commission. which was broadly repre-
sentative in character. and was composed
OF Warner Miller. Samuel H Ordway. |
Edwin R A. Seligman. Thomas F. GRADY.
Merton E Lewis. George r. Maltby, Mar |
tin SAKE. Spencer K. Warwick. c. Fred
Roshart. Sherman Moreland, Charles W
Mead. George NJ. Palmer and Arthur c. |
Wade
Con1nnission's Report Quoted.
The report of the commission. while pro- |
posing a progressive Inheritance tax
strongly condemned the method of sradus |
ton proposed by the present bill The COM
mission said:
Before deciding upon the rate Of grad |
uatloh however, we must decide on tha |
method This involves the question as r. |
whether the tax is to be levied and coro |
is the plan of the present New Yorl. iaW |
or upon the individual share coming to The |
recipient, which is the plan adopfed b[y t1e
more modern statutes of Wisconsin and !
California. The only substantial reason
for assessing and computing the tax upon !
the enure estate rather than upon the in
oividual share received is that ereater |
revenue is thereby produced We think |
however. that this objection to taxing the
individual share can be overcome nv so |
arranging the rates and percentages as to |
produce equally good results On the other !
hand. reasons OF fairness and Justice as |
we'll as sound theory, are on the side OF the
upon the individual share, received: for re-
ciplents who belong precisely to the same |
class and receive precisely the same
amount will thereby in all cases paw pre- |
cisely the same tax. whereas If the per
centage of tax were determined by the size |
of the estate. one Of such a class might be !
compelled to pay far more than another
For example, if the rate of tax is 3 per |
cent TO collateral to relatives in the case |
OF small estates. rising to Is per cent TO |
such relatives in the case of very large es- |
tates, cousin who receives a legacy of |