Evening star., 1935-09-08
LEGISLATORS SCAN
THREE TAX TYPES.
Estate, War Profits and
Liquor Levies Scanned
During Recess.
nv John C, HENRY.

BY JOhN ". HENRI.
Three major types of Federal taxa
ton are being given exhaustive con-
alteration by the Congressional Joint
Committee on Internal Revenue Taxa
ton during the months between ses-
sions Of Congress, it was learned
yesterday.
First of these, and perhaps of most
significance, is the inheritance tax.
Second is system of war-prof1ts
taxes based on the suggestions of
Senator Nye, Republican, of North
Dakota, and third is the liquor taxa
ton structure
In the first and second cases, the
technical staff is gathering data and
puzzling over problems of administra-
ton so complete information may be
available to Congress next Winter in
the event enactment of such leVieS is
deemed advisable. In the third case,
the studies are aimed at action to cur
tail possible evasion of liquor taxes
already In force, in effect to curtail
bootlegging activities.
Inheritance Tax Much Debated.
A type of levy which often has been
given passing consideration, the in
heritance tax, came very much into
the picture during the recent session,
when President Roosevelt asked its
enactment in his June 19 request for
q redistribution of wealth" revenue
bill.
Complying, the House included the
levy in its version of the bill, imposing
o graduated tax of from to rs per
cent on the net value of inheritances
above specific exemptions. Citing "the
difficulties encountered in designing an
inheritance tax even reasonably free
from serious administrative difficult
ties" the Senate Finance Committee
struck out the inheritance schedule
and substituted an increased estate
schedule, which finally remained in
the enacted law.
On adjournment of Congress, how
ever. the technical staff of the Joint
Committee on Taxation was instructed
to make recess study of this PROPOSE
ton, particularly thep roblens Of ad-
ministration. Although approximately
40 States have inheritance levies, the
ton, particularly the problems of ad-
ministration which would face Fed
eral imposition Of this tax always have
defied satisfactory solution. In 1918,
and again in 1924, attempts at such a
tax were blocked, just as were those
Of 1885.
Difficulties Held Overlooked.
With regard to these administrative
problems, the joint committee made
the following comment in a previous
study:
Aside from the revenue argument
in favor Of the estate tax, from a
practical standpoint it appears that a
Federal inheritance tax would bring
about many difficulties of administra
tion which the proponents of such
tax. having regard only for its So
called equities, are given to overlook.
The transmission and receipt of prop
erty on the death Of the owner thereof
takes place by virtue of the laws of
the several States. The probate of
wills. and the administration of the
estates of decedents dying intestate
is exclusively a matter within their
Jurisdiction.
"As long as the Federal Govern
ment levieS tax on the net estate
Of the decedent as unit, it does not
become involved in matters of probate
and administration. With such a tax,
~ raad NOT ha rnnncrrad with he
rights Of the heirs or benef1ciaries,
or generally with the valuation of life
estates and contingent interests.
Would Become So, However.
However, with the Federal Gov
eminent levying share tax, it would
necessarily become directly interested
in such matters. Before the tax could
be fixed the shares Of the beneficiaries
would have to be determined in the
State courts. In case of dissatisfac-
ton on the part Of the Federal Gov
ernment with the settlement arrived
at, it might want to appeal some ques-
tions to Federal court, such as the
valuation of the property.
There might result an interference
with the Jurisdiction of the State
courts, great amount of confusion,
and considerable extra expense in ar
irving at q settlement"
In contrast, however, it is admitted
that the inheritance tax is a more
equitable levy than the estate tax, in
that it may provide for a different
rate against the more and less de-
serving beneficiaries of an estate,
whereas the estate tax imposes sin
gle rate on the total value, bearing
equally hard upon all who share in
eventual distribution.
Such Tax May Result, However.
In the face of both sides of the
argument, 1t is possible, however, that
the committees studies during the
next few months may lead before long
to the inclusion of such a tax in the
Federal revenue system. With Presi-
dent Roosevelt already on record in
support Of this levy and the raising
Of revenue becoming increasingly i'm
portant to Government that has
broken all records for spending, this
possibility takes on added significance.
AS for committee consideration of
the Nye proposals to impose confsca-
tory taxes on wartime profits, strong
pressure is sure to result both for and
against any attempt to make such
theory into law. With conflict immi-
nent in Africa and Europe. the Nye
faction mustered sufficient strength in
the closing days Of the recent session
to push through a neutrality law. In
the event commercial interests find
themselves faced with the heavy
sugar" of munitions and war supplies
profits, however. they would surely
wage a bitter and potent battle against
congressional attempts to limit these
profits. The Nye proposal, as ad-
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