Evening star. [volume] (Washington, D.C.) 1854-1972, 1932-03-20
Affair ID. C.. Estate Tax Law
Enacted by a Congress in the Role of a "Mnnicipd
Legislature" 1t Would Protect Local Taxpayers
as Those in the STATES Are Safegnarded.

instance, has a provision in its estate
tax which reads as follows: Except as
hereinafter provided, this article shall
become void and of no effect in respect
10 the Maryland estate of persons who
ole subsequent to the effective date of
the repeal of Title of the Revenue
Act OF 1926 or of the provisions thereof
allowing the credit"
The State of Iowa says Of its own
estate act: This act shall become void
and of no effect in respect to the estates
OF persons who die after the effective
date OF the repeal of the Federal estate
tax act, or of the provisions thereof
providing for credit of the taxes paid
to the several States of the United
States. not exceeding 80 per cent Of the
tax imposed by said Federal tax
What does the new District bill pro-
pose? Exactly the opposite, as follows:
This section shall not be affected by
any subsequent repeal or changes in the
revenue act of 1926 after the effective
date hereof, nor any amendments
thereto, and If the United States should
alter, change, or discontinue the inpo-
sition OF the estate, legacy, or success
sion taxes, the tax herein provided shall
continue to be levied and collected upon
estates Of residents of the District of
Columbia as hereinbefore provided"
Claims OF proponents of the law that
the rates are somewhat lower than
the average Of such taxes in the several
States" are not borne out by the fig
ures, nor by analysis by experts who
have gone carefully into the new Dis
trict bill.
Most of the States have built their
estate tax laws SO as to take care of
the 80 per cent credit from the Federal
Government, but no more. The great
State Of New York, for instance, which
pays far more than any other State in
estate taxes, both to its own State treas
ury and to the Federal Government, has
fixed its rates in its new law so that
they correspond virtually to about 80
per cent of the rates In the Federal
estate tax law. As q matter Of fact, in
actual operation the New York estate
tax can seldom, II ever, exceed 80 per
cent of the Federal tax.
High Local Rate.
Where are the District Of Columbia
rates? Instead of being fixed at about
80 per cent of the Federal rates, they
are almost exactly the same as the
Federal rates. In other words, they are
nearly 20 per cent higher than the rates
for the wealthy State Of New York. In
a previous article in The Star it was
shown how the actual cash due under
the District of Columbia bill would in
nearly all instances exceed the tax
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as the rates themselves are concerned.
Not only are the rates of the District
Of Columbia bill high, but there Is no
provision in the bill which would pro-
hibit the taxing Of sums exorbitantly In
excess of the 80 per cent credit allowed
by the Federal Government.
A prohibition against any EXCESS OF
collections above 80 per cent Of the Fed
eral tax Is included in several OF the
State laws.
The State Of Washington has worded
1t simply: Should the amount OF tax
imposed by the inheritance tax laws OF
the State of Washington increased by
this act be afterward found to be more
than the maximum credit allowed under
the Federal estate tax act, then any ex-
cess over and above the said maximum
credit shall be refunded as provided by
law"
Like a great many other States, the
District of Columbia btll mas provision
which guarantees that the local treas
ury shall get the full benefit of the en-
tire 80 per cent, but there is nothing
said about limiting the collections to
that 80 per cent Of the Federal tax.
The language even indicates that the
local tax may exceed" the Federal
credit.
The language Of the local bill in this
respect reads in part as follows:
In the event that the total estate
taxes imposed by this act do not equal
or exceed, after all deductions for ex-
emptions and otherwise, 80 per centum
of the amount of tax imposed upon the
value of the estate Of such decedent
under title III of the revenue act OF
1926, providing for Federal estate tax,
an additional tax shall be and Is hereby
imposed on the transfer of estates OF
decedentS as follows: There shall be
added to the taxes hereinbefore imposed
an amount equal to the difference be-
tween the total of such taxes herein
before imposed plus all other credits
allowed by the Federal act for taxes
paid to the government OF the Dlstrlct
of Columbia and the State governments,
and 80 per centum of the tax which
may be imposed by said Federal revenue
act. Such taxes are hereby imposed
upon the transfer Of estates OF every
decedent who at the time OF death was
resident of the District OF Column
bia. The purpose Of this section Is to
obtain the benefit of the credit allow
ed under the provisions OF section
of the revenue act of 1926, to the ex-
tent that the District of Columbia may
be entitled by the provisions OF said
revenue act, by imposing additional
taxes, and the same shall be literally
construed to effect such purpose. Sucn
additional tax herein provided shall be
levied and assessed upon transfers OF
estates which would be liable to the
Federal tax as assessed before deduct
ing the 80 per centl!m in said revenue
act"
No Retroactive Feature.
AS was pointed out in yesterdays
article, many of the States include
retroactive provision in the law to take
advantage Of the 80 per cent credit
offered by the Federal Government, but
the new District estate tax bill omits
such provision entirely.
These retroactive provisions operate
to go back prior to the date of the
enactment of the estate tax levied by
the State and obtain 80 per cent Of
the Federal estate taxes which were
paid prior to the enactment of the
State law, under the revenue act of
1926. The Bureau of Internal Revenue
has been granting refunds under these
State laws, according to the rules and
regulations governing refunds.
A Statement of the Principles.
The practice now generally followed
by the States in collecting the full 80
per cent credit Of the Federal estate
levy is regarded as valid and fair. One
of the best Illustrations Of the theory
behind it is found in an advisory opin-
ion rendered last March by the Supreme
Court of New Hampshire, which was
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