Evening star., 1932-03-15

executor OF the estate Of Edward II
Haskell, deceased, VS.. Maine, which
holds, according TO the report, that
States cannot tax The intangible prop
erty Of nonresident decedents."
THE proposed bill should be amend
ed to conform to this decision" says
the report.
THE very nature Of the tax demand.
that each class Of property should be
clearly differentiated as to that tax
able in estates of resident decedents anc
that taxable In estates Of nonresident
decedents. Furthermore, the definition
OF intangible property found in the
last sentence Of section 9 of the bill
beginning on line and continuing
through line IL, belongs logically ir
section g."
The second change relates to "de-
auctions for losses from casualty OF
theft" The report points out that the
bill makes no provision for losses from
these causes, whereas the Federal Law
permits deductions that are limited
strictly to property losses and not to
losses arising in trade or business" pre-
sumably on the theory that property
loss during the settlement of an estate
should not be taxed, because it is not
received by the beneficiaries" The bu-
reau suggests adding to the section
which numerates deductions from
gross estates a new clause to cover
losses incurred during settlement of an
estate. and arising from fires, storms
shipwreck, or other casualty, or from
theft, when such losses are not COM
pensated for by insurance or other
wise"
Revision of Exemptions.
The third change deals with revision
Of exemptions to lineal ancestors and
descendants and to brothers and sisters.
The bureau points out that the bill in
its present form allows deduction
from the gross estate of $4,000 to the
widow. $4,000 to a widower, $4,000 to
brother or sister. $4,000 to any lineal
ancestor Of the decedent or child.
The exemption on property trans
fered to a brother or sister Of dece-
dent" the bureau emphasizes, 'is
greater than that on property trans
ferred to his child. The discrimination
in the bill between the two classes of
relatives is unusual. In the order of
things, a brother or sister generally
being more nearly the age of the dece-
dent is likely to be less dependent upon
him than are his children. Often when
minors the children must be supported
out Of the proceeds of the property Of
the decedent, whereas collateral rela-
tiveS are usually not in the same situa-
ton. An examination of the
State laws indicates that in a majority
of jurisdictions the exemption for a
child Is higher than that for brother
or sister. Lineal ancestors and de-
scendants are frequently placed in the
same class in respect to exemptions,
probably because they are often in the
Immediately family Of the decedent,
and are therefore treated alike In this
respect the proposed bill is in harmony
with the accepted practice in the States,
in the same class, but the exemption to
this class is very small.
1T is therefore suggested that the
exemption to lineal ancestors and chill
dren be increased to 5000 and that to
a brother or sister be reduced to $4,000"
The fourth suggestion of the bureau
Is Qualification Of tax computation. I"
The bureau reveals that the section Of
the Mapes bill containing the schedule
of tax rates on net estates of different
amounts is so worded as to be subject
to different Interpretation as to the
method of actually computing the tax.
For example, the Mapes bill starts out
by stating that the tax hereby imposed
upon the value of the net estate shall
be at the following rates:
% Not in excess of $4,000, / per
cent.
(2) Over $4,000 and not exceeding
100000, 2 per cent.
Gradually Increasing Rate.
The schedule In the bill continues
upward by steps, with a gradually in
creasing rate for the larger net estates.
Discussing this method of setting up
the schedule, the Efficiency Bureau Il
Illustrates how 1t might be interpreted
different ways, as follows:
Under one Interpretation the tax on
a net estate of $4,000 would be 2 per
cent, or $1,000, as the estate was over
$50, 900 and not exceeding 100000
II the computation for the same estate
of 5000 is made on an increasing rate
plan, the tax would be l per cent for
the first $4,000, or $500, and 2 per cent
for the remaining $25, 900, or $500,
making a total Of $1,000"
In other words, the bureau shows
possible difference Of $500 In the tax
on a $4,000 estate, depending on how
the rate section is interpreted.
In order that there may be no uues-
ton as to the meaning of the law, it Is
suggested that language similar to that
In the Federal estate tax law be used"
The Federal language recommended
by the bureau would start as follows:
The tax hereby imposed upon the
value OF net estates shall be at the
following rates:
One per centum of the amount Of
net estate not In excess Of $4,000.
Two per centum of the amount by
which the net estate exceeds s50,o00
and does not exceed 100000" Similar
wording is used for the various higher
rate steps
The fifth amendment deals with "al-
loWance for property previously taxed"
The bill proposes to tax all property
In an estate regardless of any former
death duty that may have been imposed
thereon," the bureau said. There Is
possibility Of repeated taxation In cases
where several deaths occur closely to-
gether in the same family. An estate
may pass from an aged decedent to the
surviving spouse and from the spouse
TO the heir, all in a very short time,
thereby necessitating the collection OF
TWO distinct taxes on practically the
same estate. Recognizing this contin-
gency. the Federal Government allows
the gross estate to be diminished by an
amount equal to the value of any prop
erty forming part of the estate of a
person who died within five years prior
to the death Of the decedent. While
the exemption of property within cer-
tain limits appears justified, it may be
questioned whether the Federal exemp-
tion does not go too far in respect to
the time and the extent of the ex-
emption.'
Death Duties Allowances.