Evening star., 1931-05-31
All Other States and Canada.
Member Of the Associated I
An Inheritance Tax.

An article in today's Star contains
Interesting discussion Of the effect OF
imposing an inheritance, or estate tax,
locally. The subject is Of course timely
in view Of the opinion expressed by Mr..
Jcrd. the expert engaged by the House
Fiscal Inquiry Committee, that such a
tax should be collected locally as
source of revenue that now goes untap-
ped-except by the Federal Govern
ment. One immediate effect of the
tax, provided the taxing body framed
its legislation in accordance with that
of the majority Of the States, would be
to give the District Of Columbia ap-
proximately eighty per cent OF estate
tax revenues that now accrue ex-
cluslvely to the Federal Government. In
1925 this revenue amounted to $502.-
e32; in 1927, 41,717.341; in 1928, 1885,
9s4; in 1929, $1.124,866, and in 1880,
S744,068.
II the fiscal inquiry committee OF
the House recommended and Congress
imposed an estate tax locally, the Dis
trict would naturally benefit at the ex-
pense of the Federal Government. AS
for the effect on the taxpayers, their
increased liability under q local tax
would depend entirely upon the amount
of exemption allowed under the District
law, a matter which varies in the
States
The District and Alabama are now the
only political units that do not tax
inheritAnces for local revenue. Florida
has just notified the Bureau OF
Internal Revenue that 1t has imposed,
or plans Immediately to impose. an In
heritance tax. Florida once capitalized
its lack of an inheritance tax, along
with big Ash and gulf breezes. How
much she gained by the attraction thus
offered to millionaires seeking a place
to die in a location most beneficial to
their heirs and assigns has never been
statistically developed. but the fact that
the absence Of the tax has been substi-
tuted by the tax itself indicates that
the compensatory features of being a
haven for estate tax dodgers" may
have been overrated.
In the majority Of States. with such
notable exceptions As New Jersey. the
effect of the double levy imposed by
Federal and State estate taxation is
that the States usually wait for the
Federal Government to impose its tax.
Under the amended revenue act Of
1926, the estates are given a credit Of
80 per cent of the Federal tax ac-
tually paid to the State. In other
words, when an estate Is liable to Fed
eral taxation, the total Federal tax is
divided between the Federal Govern
ment and the state on a basis Of 20
and 90 per cent, respectively. Where
some Of the States gain additional reve-
nue., and this Is naturally the guiding
principle underlying the proposal for
a local estate tax in the District, Is
that the exemptions under the State
laws are less than under the Federal
laws. The Federal law begins to col
lect its tax at 100000. Many Of the
State laws reach smaller estates that
pay no Federal tax. The feature Of a
local estate tax that commands the
study OF local taxpayers IS the extent
to which Congress would go in taxing
local estates, and the nature Of the
estates to be 50 taxed; whether, for
instance, an estate consisting entirely
OF insurance. is to be subject to the
same tax applying to estates represent
ing other forms Of investment.
whether the absence of local estate
tax in the District makes the Capital
City the haven for men who leave less
than 100000 Is a question. 1t would
be dif1cult to draw up list Of resi-
dents Of Washington who have moved
to the Capital in order to die relatively
about tAx-dodging is 1eveled as q charge
or accusation against the people OF the
District, it becomes rather absurd in
view Of the fact that the unrepresented
people Of the District, alone Of all the
citizens, are denied the right Of taxing
themselves. The assessment and the
form Of taxation are fixed by Congress
The only motive that should prompt
Congress in deciding upon the proper
method of taxing the District Is
the desire to impose an equitable and
equalized form Of taxation that will not
be oppressive nor become an undue bur-
den upon the taxed.
1t is we'll to study the whole plan of
local taxation with view to remedying
what may have become its deficiencies.
It is' altogether futile to believe that the
important problem of fiscal relations be-
tween the Capital community and the
Nation can be solved by imposing
higher taxes on the local partner, or by
eliminating the phrase "in lieu Of to
Nlaster en- additional taxes under the
subterfuge Of substitute taxes.