Evening star. [volume] (Washington, D.C.) 1854-1972, 1911-07-10

ming to understand the effect Of the law.
and are gradually placing their property
beyond the jurisdiction Of the tax col
lectors of this state. The trust companies
are feeling this movement seriously. and
while It has thus far affected chiefly in
vestments in the form of stocks. bonds
and mortgages, 1t is feared that il will
soon be felt in industrial and commercial
circles. because the law bears directly
upon al! investments and every form of
property that can be conveyed by legacy
Governor Urges Modification.
Although the message Of Gov. Dix urg-
ing the modification Of the inheritance
tax was very urgent, and the statement
OF the Bankers Association was very
clear and convincing. the legislature does
not seem to share their anxiety, and, in
deed, has shown no sympathy whatever.
On the contrary the committee in charge
tucked the documents into pigeon hole
and proceeded to recommend the pas
sage Of a resolution ratifying the amend
ment TO the federal Constitution author
f1n9 an income tax. which the demo-
cratic. steering committee has made q
party measure and intends to pass before
adjournment.
The sentiment and the disposition of
the majority Of both houses is very clear
" antagonistic to the money interests
and the Endorsement OF the labor unions
and the socialistic element is expected.
driven out Of New York as he was
driven out of Ohio by the Mergenthaler
law a few years ago. The tax laws Of
New York, until now, have been favor
able to those who have great possessions.
and the legacy tax. which is now COM
&.
tack upon capital. but was considered
necessary to raise additional revenue to
meet the extraordinary appropriations
that have been voted during the last few
which will cost 5000. 600 for Improving
the roads in the rural districts at cost
Of 100000 and for various other pub
lie improvements which are being carried
out on most generous. not to say ex-
travagant, scale. But 1t is regarded as
defeating its object by driving away from
the state rich people who are not willing
to divide their money between the PUBIC
and their heirs.
The Bankers Association took legal adj
vice on the subject before 1t went to
the legislature. 1t was told that there
was no relief in the courts, and there
does not seem to be any relief In the leg
islature either. The democrats intend to
make as much political capital out OF
the matter as possible, and believe that
theory that the masses Of the population
will approve any measure that VIII COM
pei multi-millionaire to divide his
money with the state.
One Means Of Escaping Tax.
Mr.. Carnegie's theory that 1t is crime
to die rich ought to suggest to the gen.
tlemen who are frightened by this law
that the best way to escape the tax
would be to divide their property before
death, and it is singular that SO many
neglect or dislike to do so. One would
suppose that the qualification of giving
would induce a father or q rich uncle TO
distribute his wealth among his heirs
with his own hands In order to enjoy
the pleasure that would come from thelr
gratitude, but the tendency OF those
who have is to hold on to 1t as iong as
possible and leave the enjoyment OF CIV
ing to the trust companies and the law
yers that get commissions. But It IS
sometimes difficult to please legatees.
The inheritance law hits the trust COM
panies very hard. OF late years it has
become the custom to designate them as
trustees and administrators OF estates In
stead Of appointing individuals. But I'M
der the law such trusts are construed as
legacies to other than relatives and are
subject to the graded tax up to maxi
mum OF % per cent. This discovery has
caused the alteration of hundreds OF I'M
portant Wills and has deprived several
prominent and popular institutions OF ex-
pected fees and commissions. For ex-
ample, very rich old gentleman, whose
estate is estimated at more than $40
OOO, 600 in gilt-edge securities. had his Will
drawn with great care several years ago.
creating a perpetual trust for the benent
of his descendants. and made New
York city trust company executor. Since
the agitation for the repeal or modt1ca-
ton Of the inheritance tax he has sub
rnitted the question 10 his legal ADVISERS,
who Informed him that under the terms
of his will the state government VIII De
entitled to 25 per cent Of all his property
The result was a cancellation Of the orig
inal will and the drawing OF new one
in which a trust company OK hartIoro
is made executor in place OF the trust
company in New York.
which a gentleman who has between two
and three million dollars In securities
that he cannot take with him when he
crosses the Styx has made Newark
trust company executor OF his estate IN
place Of a New York company which
was named In his will several years ago.
Foreigners Withdraw Investments.
Another effect Of the law has been to
cause foreigners to withdraw investments
In American securities which are liable
to the TAX. All SIOCho dAAu oo'AuS -
American corporations conveyed by leg
acy by foreign holders are subject to the
tax. regardless of the place of residence
of the owner And 1t Is said that at least
500. 600, 600 of American securities held by
foreign investors who have learned or
this provision have been sold during the
last few months.
There Is no way Of getting around the
tax. The law forbids a safe deposit COM
pany to open or allow the deposit box OF
one OF its patrons to be opened by an
executor, administrator or trustee. ex-
cept with the permission and In the pres
ence of q representative of the tax de-
partment
The effect Of this law was not under
stood by the general public until the
present agitation began, but the message
Of the governor and the statement sub
mitted by the Bankers Association have
opened the eyes Of all whom 1t may con-
Germ, and Just now there Is a stampede
among the rich to get their money out
of New York lest they may be killed IN
an automobile accident or expose their
heirs to the tax in some other way.
The state Of New York Is In q very
bad way financially. Tho last two or
three legislatures have made excessive
appropriations for pubfis work and other
purposes which cannot be met by the
ordinary revenue, and It will be necee-
sary to issue $3.50 OO0. 600 or more Of bonds
to cover the deficit. This plan Of loading
upon posterity tho cost Of Improvement,
which the present generation desires. is,
of course, approved by current theories Of
finance. but the interest must be paid by
N-~ 4s M