Evening star., 1935-08-11
DANGERS" SHOWN
IN PROPOSED TAX
ON |NHER|TANCES
Sample Cases Reveal Levy
Might Completely Wipe
Out Estates.
RESULT OF COMMITTEE
DEFEAT is UNCERTAIN
Plan Now Shelved, but Possibil-
ity of Revival in Senate or
Conference Remains.
BY H. b. ROGERS.


eliminating the administrations in
heritance tax proposal from the pend
ing tax bill apparently has seen the
same dangers" which experienced
men in the trust business have known
were embodied in that measure
1t remains to be seen now whether
the inheritance tax provision will stay
cut of the bill after it goes to the
Senate itself, and then to conference
But according to an analysis of the
facts as presented by several actual
ssmple cases the inheritance tax might
have practically exhausted certain
estates, leaving virtually nothing for
the beneflciaries.
The claim that a substantial residue
would be left the survivors under the
eliminated House inheritance tax pro-
viso is refuted by some examples of
actual estates lately administered.
In perhaps a majority of estates,
according to an analysis by expert
enced men in the trust business, there
are several factors: Real estate, in
tereStS in a business, stock in a close
or family corporation, securities not
readily salable, family homes, mort
cages and variety of properties, all
making up value upon which taxes
must be paid. but not readily salable,
when salable at all, except at a serious
sacrifice
Big Shrinkage Certain.
Wherever the balance of appraised
value after taxes and expenses consists
OF such slow assets, there is almost
certain to be a serious shrinkage in
that balance, and but little, if any,
thing, actually realized for bene-
flciaries
One example showed that an estate
of S350,000 recently administered con-
sisted of real estate of $4,000 and
the entire stock of a cotton mill ap-
praised at 100000. Expenses and
taxes would have been approximately
100000. No such sum could have
been raised except by sacrificing sale
at around 100000. The family would
have lost the mill and had at best
probably less than 100000 from the
sale of the mill, and the real estate,
which they could not have afforded
to keep.
Take the case of another estate ap-
praised at $2,000,O00. 1t had real
estate Of $377000 stocks, bonds and
cash, 100000; real estate mortgages,
Sl,540000. Administration expenses
and debts would be 100000; present
estate and proposed inheritance taxes,
S815O00; total cash required for taxes
and expenses, $1,0l5,000.
Leaves Theoretical Balance.
This would leave a theoretical bal
ance of Sl,100,000 to the family, but
to have raised cash for taxes and
expenses would have exhausted the
entire cash, stocks and bonds of
100000, and required 100000 from
real estate and real estate mortgages.
At no time since the death of the
decedent could 100000 have been
realized from the mortgages and real
estate without practically exhausting
the entire estate.
Under the inheritance provision the
executor was held personally liable for
the collection and payment of taxes.
And If the executor sacrificed the
assets OF the estate within the first
year, thereby reducing the tax liability
OF the estate and his own liability for
payment of the tax, an analysis points
out, little if anything will be left in
the majority of estates for the de-
cedent family.
Faced with what were considered
rigorous provisions of the bill, it was
said financially responsible individuals
and corporations would not accept the
duties of an executorship. Families
would have received no financial as
slstance until after cash has been re-
allied for the payment of taxes.
Housing Loans Successful.
A survey of the loans here under
the Federal Housing Administration
through financial institutions shows
that the program is working out to
the mutual satisfaction of the fnan-
cial institutions themselves, and to
the borrowers.
This is evident in figures showing
that to date in the District of Colum-
bia there have been 1890 loans under
Title of the act. loaning about ST.
100000 for "renovizing."
In addition to this. 285 loans have
been made under Title II of the act,
in the sum of S1,808 900, for long
term mortgages at low rate of in
terest.
Thus a total of about 32.80s 900
has been put to work here under the
F. H. A. program.
James c. Dulin, jr.. chairman of
the District of Columbia Bankers
Association Credit Bureau Committee,
supervising the work in Washington,
expressed qualification at the scope
OF the program.
Robert v. Fleming. vice president Of
the American Bankers Association
and president of Riggs National Bank,
has taken a deep interest in the F.
II. A. movement, and represented the
A. B. A. in setting up contact men in
all State bankers associations through
out the country for this purpose.
Fleming Praises Results.
"It is all working out splendidly," I"
said Mr.. Fleming last night. little I
is affording easier terms of credit to
those who otherwise might not get
such credit.
Title II is affording satisfactory
machinery for long-term mortgages at
reasonable rates, giving home owners
the opportunity of paying for their
homes over number of years. At the
same time the plan gives adequate
protection to the lender through
standardizing appraisal, and through
the insurance features of the act"
The larger companies are owned by
Continued on Fourth Page.)