Evening star., 1931-12-17
J0Ik'ERS MAY LIE
|N:ESTATE t. TAX BILL
80
Mapes Measure Seems to
lack Safeguards of
r- State Laws.
sEContinued From First Page J

SIduNNs ,llONeNtl, together Wltn Lne rates
provided in the new bill, which have
led experts to inquire whether the new
taxes after all will serve to raise the
levy OF local estates substantially above
the present level No final answer has
been reached as to this inquiry, but it
Is being vigorously pursued. Unfortu-
nately there is no way Of answering this
question, at present, as no hearings on
the bill have been permitted.
Past Situation Reviewed.
To reach clearer understanding of
che estate tax situation it is we'll to re-
call that prior to the 1924 Federal
estate tax law, the Federal Government
TOOK all OF the estate tax accruing,
without allowing one cent Of credit to
the States. Some States applied their
own State taxes on top of the Federal
levy. thus forcing the executors of
estates TO pay twice. once to the Fed
eral Government and once to the State
The principle of the credit to States
was incorporated for the first time into
Federal legislation in 1924. when the
limit OF credit to States was fixed at 25
per cent. In other words, the Federal
Government subtracted from its levy
an amonnt paid to the local common
wealth in estate or inheritance taxes.
up to IS per cent of the total of the
Federal levy. This was increased later
TO 30 per cent. where it now stands
Many OF the States have changed
their estate tax laws since the 80 per
cent credit feature was Incorporated
into Federal law These States have
set up their own legislation In various
ways and with varying rates. So far as
could be learned, no recapitulaton of
all these State laws has been made to
ha
What Is the normal or average inherit
ance or estate tax paid by these States
Levies Are Fixed.
But In several Of them it has been
expressly written into State law in one
KIND OF language or another that the
State cannot collect more than 80 per
cent OF the Federal levy, thus leaving
the 20 per cent for the Nation. The
New York State rates on estates. for
instance, are virtually figured out at
about 80 per cent of the Federal rates
Florida. Massachusetts and Pennsyl-
vania have provisions in their estate
tax laws which operate somewhat SINH
larly, although the State of Massa-
chuSetts also has an inheritance tax in
addition to the estate tax.
These two taxes-inheritance and
estate--are really separate and distinct
The inheritance tax for instance is de-
nned by one expert as "a tax on the
right to receive and is computed upon
each legacy or diStributive share" The
estate tax. on the other hand. is a tax
"on the right TO transmit and is COM
puted on the estate as whole" In
the House Committee report en- the new
District of Columbia estate tax bill. 1t
was explained that the estate tax was
favored as against an inheritance tax
because the estate tax was simpler. and
easier to administer.
Take the State Of Florida. for in
stance, which has no Inheritance tax
In order, to attract wealth. but which
has recently enacted an estate tax to
get It's W per cent Of the Federal estate
levy. The Florida law has kind Of
restriction which operates to make its
estate tax equal to about 80 per cent of
the Federal tax. The Florida law saws.
IN part: 1T Is hereby declared to be the
purpose and intent OF this act that the
highest amount or tax which NAV he
collected by .the State Of Florida under
this act shall not exceed the amount
OF credit which the taxpayer NAV be
allowed by the laws Of the United
otates, TO have credited on taxes pay
aoIe 10 me United States by reason Of
taxes paid as inheritance or estate taxes
TO the State Of Florida as provided bv
tne laws OF the United States at any
time In force and effect"
Estate Tax Restricted.
The State of Mississippi, with both
Its inheritance and estate tax. still has
In its law a Kind of restriction on the |
estate tax. This law says, in part. that
tne amount OF the estate tax shall be |
the amount by which 80 per cent of the |
estate tax payable to the United States |
unoer Inc provisions Of the Federal |
revenue act OF 1926 shall exceed aggre-
gate amount of all estate. inheritance
legacy, and succession taxes actually
PAID to the several States of the United |
STATES, IN respect of any property own
ca py Sucn decedent or subject to such |
taXeS as part of or in connection with |
his estate"
New York, which formerly ly mad both
An inheritance and an estate tax re-
Gently repealed Its inheritance tax, and
now rests entirely upon its estate tax
In this particular for revenue from
wealth OF decedents. The New York |
rates are computed at very close to 80 |
per cent of the Federal estate tax rates !
In the State of Pennsylvania. which
is also heavy contributor to the Fed
eral till, there are both an inheritance !
tax and an estate tax. The inheritance
tax stands at per cent on beuuests |
left to close relatives, and 10 per cent
on all else. The Pennsylvania estate |
tax carries. however, another one of |
those provisions which reads in part !
rs follows:
Whenever in any estate the total tax
paid or payable to the Commonwealth |
and any other State or Territory at the |
rates fixed under the inheritance tax
law, shall be less than the total credit |
allowed by the Federal law for taxes
paid to the States, then the tax i'm
posed by this act upon the transfer of |
such property shall be an amount equal
to the difference between the total
credit allowable by the Federal law for
taxes payable to the State government !
and the total taxes actually paid or
payable to the Common wealth and any
other State or Territory under the in
heritance tax laws"
Exceptions Are Cited.
This reference to "other State or
Territory" included in several of the
laws refers to taxes placed for instance
upon such things as farm in Ken
lucky. belonging to a man who died
IN the State of Pennsylvania The
Kentucky estate tax on that farm is
included with the Pennsylvania estate
eoHeS Ii COMPUTING Ille oo per CeIlI
credit allowed by the Federal Govern
ment.
Thus 1t is seen that the estate taxes
Of both Massachusetts, and Pennsylvania
are only designed to take up the slack"
between the inheritance tax level and
the 80 per cent credit allowed by the
Federal Government
But when experts turned to a critical
study OF the proposed new District Of
Columbia estate tax Jaw, they found
situation surprisingly reversed.
Instead Of restriction holding down !
the local estate tax to 80 per cent of the
Federal levy, the new District bill con- .
tains provision forcing the District to |
levy local estate tax up to the 80 ,
per cent. Some students of the bill ap-
peared today to be satisfied with this :
provision as adequate, meaning that the
DiStrict Of Gnl,lr,ahia cafia;s .i,.,s |