Evening star., 1935-07-26

SENATOI
consequences. Definite comments. OF
course. cannot be made until the exact
schedule of rates is disclosed.
The Presidents first proposal is to
leave the present Federal estate, or
death, taxes just as they are. but to
add a new inheritance tax. on pro-
gresSively rising scale, to be paid by
the heirs or legatees out of the
amounts which they receive after de-
duction of the debts and after de-
duction of the death taxes. To bar
any escape from these new inherl-
tance taxes through the avenue OF
gifts during life. it is proposed to very
largely increase existing gift taxes.
The present Federal estate taxes
the death taxes-do not apply at all
to estates of small amount, nor bear
too heavily on estates of moderate
size. Thus, on an estate of half a
million dollars. the present Federal
estate tax is not over 100000. The
Federal Government at most takes
only about IL per cent. From the
standpoint of taZ revenue, the estates
of moderate size offer a possible re-
source and. of course. will be given
increased rates in future revisions
when the objective of tax legislation
is revenue raising.
But the President, when discussing
new inheritance tax levies, refers to
great accumulations of wealth." and
to vast fortunes" His words have
been taken to refer to the Morgans
and the Vanderbilts and the Astors
and the Fords. Let us see what are
the facts, for previous Congresses have
not, as they should not. extended
favoritism to the rich. Under the tax
laws already in effect the Federal
estate taxes-the death taxes-on
fortune of $10,000,000 amount, at
maximum, to $4,387, 500, and on a
fortune of s50,000, 900 amount to more
than 20 million dollars at the maxi
mum-well over half the total estate,
and on s1o0,oo0.oo0 may amount to
s56000,000. These taxes are obviously
very large.
Conversion Is Minor Detail.
What the President seemingly has
in mind is the fact that even as in
the case of $4,000, 900 fortune the
Government. as of now, takes almost
one-haf in taxes. Yet the heirs have
the $4,000, 900 left and the President
recommends a tax on these inheri-
tances-similar to that now levied by
the several States. Just how 5. 10
or 25 million dollar estate comprising
real estate, manufacturing enterprises,
bonds. mortgages and stocks Is to be
converted into cash for payment into
the Treasury of the United States is
seemingly a minor detail to be pro-
vided for when Congress writes the
new tax bill. To prevent the Govern
ment taking over these estates it is
proposed that this tax may be paid
in installments extending over IL
years.
OF course, actually, the question of
turning into cash vast fortunes repre-
sented by skyscrapers and steamships
and mills and mines and factories and
tenements. in country where large
incomes are to be rigidly suppressed,
presents very grave practical diff
culties unless the Government itself
is to be the purchaser.
I do not intend to convey the idea
that q Federal tax in addition to the
State taxes already levied, and steadily
being increased by the States, on
large inheritances may not be justi-
fled. Yet insist great caution must
be exercised, for it is entirely possible
to write an inheritance tax schedule
at rates so confiscatory as to be both
socially and economically unsound,
and as practical matter utterly un-
workable-unleSs we want complete
State socialism.
Let me illustrate what may happen
If we resort to confiscatory taxes. Up
to the time of the present depression
I have observed in my travels through
Massachusetts,, typical of all other
States, a large number of beautiful
and prosperous small communities,
many Of them real beauty spots,
situated along the shore. lakes, rivers
and country side. Many people were
employed in these communities, yet
there were no stores, commercial
houses or factories there. They were
employed on the estates Of the So
called rich as farm hands, gardeners,
household servants, employees in the
stables, dairies and greenhouses.
have in mind one community where
there were members of four families
who were known to be rich, occupying
separate estates, all of whom together
employed at least 200 people. It is
not necessary to add that the working
conditions and wages paid and the
home life of these employees we're far
beyond and above that of the in
dustrial workers. Are these opportuni-
ties to be employed to become extinct?
Are these communities to become de-
serted villages?
Many Already for Sale.
LII MY JuueiuCIt, II VIC OO klOC pro-
ceed with extreme caution, all this
source of employment-in the past
representing a small army of con-
tented workers-will be wiped out.
Indeed they are fast being wiped out.
These estates are everywhere for sale
at absurd prices. In fact, many Of
them are passing to the State for
taxes. A taxation system that con-
fiscates through estate and inheri-
tance taxes by both the State and
Federal Government will be the last
straw
I plead that in our efforts to soak
the rich," we hesitate to proceed to
limits that win put this class of work.
ers among the unemployed or send
them out into the industrial centers to
compete for Jobs with the industrial