The Chattanooga news. [volume] (Chattanooga, Tenn.) 1891-1939, 1920-08-03
IMPORTANT RULING
ON INHERITANCE TAX
Gen. Thompson Decides Indi-
vidual Legatees Pay, and
Not Estate as Whole.

In an opinion filed with the county
! court clerk, Atty Gen. Thompson has
held that the Inheritance Tax law passed
by the Tennessee legislature of 1919, is
to be construed so as to tax the amount
received by each legatee, devisee. or
heir. rather than taxing the state as u
whole.
The act has been under fire at various
times since its passage. His decision will
be of Importance, particularly to those
having the management oflarge estates,
as 1t serves to clarity conflicting and
doubtful clauses.
IT will be remembered that the ques-
ton of Inheritance taxation is no new
one in Tennessee, our Legislature having
passed such provision many years pre-
vious to 1919. In the inception of this
kind of taxation 1t was fought as~heing
unconstitutional in this and other juris-
dictions. Needing the revenue, and It
being a popular measure, the states re-
lied upon their common law theories to
support the position taken. The state
being the sovereign reafflrmed that no
individual possessed the right to own
property except through its consent.
Particularly did no citizen have the righr
to dispose of his property on death,
or to receive it from the dead, was not
an inherent one in the individual. but
was only by consent of the sovereign.
The federal government supported its
y
that it had the right to tax the privil-
eye of succession to property, on the
death of the owner. The supreme court
has later reversed this position and now
holds that the Federal Estate tax Is
based upon the privilege granted to the
individual of disposing of his property
on death, either by will or otherwise.
There is an exemption of $4,000 under
the federal law.
Gen Thompson in his opinion holds
that the Inheritance Tax law of Tonnes
see before 1919 considered the Estate as
a whole for the making up of the amount
of the tax In reality the tax was COL
lected upon the privilege of dsposing
of the property but 1t was sustained III
Its constitutionality upon the theory that
the privilege Of succession to the prop
erty was taxed.
The Act of 1919 is materially different
in its wording from former acts of this
state. There is a graduate scale OF
percentages due on the value of prop
erty bequeathed In the case OF collat-
erals who inherit per cent. is paid on
all amounts up to $4,000, 6 per cent. on
amounts from $4,000 to 100000 FL
nally reaching the limit of 10 per cent
to be paid as taxes before the property
is surrendered to the heirs. Gen.
Thompson holds that as the theory up
which this act has been sustained,
namely that the privilege OF succession
Is LuNSu, InHL Iile HIIluulll ItttiNth w
each leEatee devisee Is taxed and not
the estate as n whole On eastates over
$50. 900 the ruling is in favor of the
heirs and against the state
IT Is interesting to note that there
are numerous decisions upon the ques-
ton of inheritance eaxes. which hold
that the state has the unlimited power
Of taxation upon Inheritance. That II
may take all or none Of n dead mans
effects. provided always that 1t has not
limited such confiscation by its constitu-
tlon which is its contract with its citi-
zens Inheritance taxes have been con-
strued to he those of privilege and not
on property and need not be uniform
to the same degree. II the time should
come under the rulings and precedents
established where the consensus or opin-
ion would desire the destruction OF all
large estates, they could he taxed twice |
hy the Federal government; Once on the |
privilege of disposition; once the privil- |
ege OF successor The state could then
gather what was left with two more |
tavns on the same theory
The question was taken UP by John j. |
Fort and J r. Sizer. MS attorneys for the |
executors Of the Frances Fort Brown |