Evening star., 1932-03-18

| IHtS - tte InT1 oJ ss'IeS ~
ticles discussing the proposed estate tai
NREvIOUS articles Of this series
- have pointed out how the Dis
trict estate tax bill now pend
l. ing in the Senate Committee
would place a heavier burden
on estates In this city than most
States place On transfers OF property
at death.
This article discusses the question of
a retroactive feature, which Is omitted
from the District bill.
Neither the Mapes bill to levy an
estate tax on transfer of property at
death here in the District Of Colum-
bia nor the Bureau of Efficiency re-
port on that bill have anything to say
about retroactive provision that has
been included by many States. which
goes back into past years to collect
so per cent of the Federal estate
tax, allowed as a credit" to the States.
No explanation Is given either in the
report Of the Mapes bill nor in the
Bureau Of Efficiency report as to why
this feature wa eliminated from con-
sideration. II Is known to have been
considered, but for some reason was
left out.
Would Return Large Amount
Should such a retroactive provision
be enacted into the District estate tax
law, it would operate to take many
thousands of dollars out of the Federal
Treasury, and put it to the credit Of
the District of Columbia.
Several States of the Union already
have enacted such provisions into their
estate tax lays, and have obtained large
sums as a result of the operation OF
such provisions. The Bureau of In
ternal Revenue Is on record as saying
that there has been no disposition on
the part of the Government to Ques-
ton the validity of the exaction of the
State"
As the new District estate tax bill
now stands, it will allow 80 per
cent of the Federal estate tax to be
credited to the District of Columbia in
the future. For instance, If the Fed
eral estate tax on certain transfer OF
property at death were 100000. the
Federal Government would take only
$40 900 cash, and credit the other S80.-
600 to the District of Columbia. One
of the inequalities of the new District
estate bill, however, as has been pointed
out in previous articles, is that the
District would not only collect It's
$50 900 part of the Federal credit, but
would add substantially more to its own
tax. Estates here would have to pay
something in addition to the Federal
estate tax. In many States restric-
tions are enacted into law which hold
down the State levy to 80 per cent OF
the Federal tax, in order to avoid
additional taxation by the State.
Effective Date inserted.
AS a matter Of fact, the original
Mapes estate tax bill had no effective
date clause in it, and one was sug-
eested by the Bureau of Efficiency re-
port, reading that except as otherwise
provided, this act shall take effect upon
its enactment"
But what have some of these States
accomplished by their retroactive pro-
visions, and what are these provisions?
In the first place, these States have
succeeded in getting back from the
Federal Treasury thousands OF dollars
which had been paid to the Federal
Government prior to the enactment by
the State of new estate tax law. The
Government has acquiesced in this pro-
cedllre. and has paid in refunds the
money found due, after proper consid-
Grafton and operation OF the refund
provisions of the estate tax law.
Take the State Of Indiana, for IN
stance. It was the Hoosier State which
drew from the Bureau of Internal Rev
enue an official statement virtually ap-
proving the principle of the retroactive
clause.
Indiana provided with other things
that its new estate tax should apply
to estates of decedents dying on or
after the effective date Of the Federal
revenue act Of 1926"
Outlines Federal Policy.
In answer to a query concerning the
Indiana act, H. F. Mires, then acting
commissioner of the Bureau Of Internal
Revenue, wrote under date OF June Is,
Of last Summer, as follows:
Reference is made to your letter OF
May IL, 1881, asking to be advised
whether the Treasury Department will
allow a credit against the Federal es-
tate tax under section 301 (b) of the
revenue act Of 1926, on account Of any
State transfer tax paid to the State
of Indiana under the retroactive pro-
visions of section 38, chapter rs, laws
Of 1881, effective March 6, 1881.
Section SO of chapter rs, laws of
1881 (of Indiana, in substance, pro-
vides that additional inheritance tax
is imposed upon all the estates sub
ject to an estate tax under the pro-
visions of the United States revenue
act of 1926, equal to the difference be-
tween the total of all transfer and in
heritance taxes paid to the several
States Of the United States and 80 per
centum Of the Federal tax. The pro-
visions of this section apply to estates
of decedents dying on or after the ef-
fective date of the revenue act of
1926 1t is provided that II the United
States Government should refuse to
allow a credit or should collect the
amount of the credit previously allowed
by it for the additional inheritance tax,
then the treasurer Of the State shall
refund the amount for which credit
was disallowed by the Federal Govern
ment. 1t is also provided that If Title
III Of the revenue act should be re-
pealed then the tax imposed by sec
ton 38 shall become void in respect
sequent to the effective date of such
repeal. Apparently the additional tax
imposed will be collected by the State
of Indiana, regardless Of whether the
administration of the estate is closed,
and regardless of the fact that its tax
liability both under the Federal estate
tax law and the transfer tax law Of
Indiana in effect at the date of the
decedent's death has been entirely set
tied.
Your letter refers to the fact that
other States have enacted statutes to
absorb the 80 per centum credit
and making the statutes retroactive. In
all the cases mentioned the Govern