Evening star., 1937-04-21
fThis is the first OF t,uo articles
on the estate tar

TINE proposed estate tax is de-
signed to levy death taxes or
the estates of decedents here
and on certain property
located here but belonging to person!
who die elsewhere.
Such an estate tax is generally re.
garded as fair by authorities, espe.
cially as the Federal law allows 6
credit up to 80 per cent of the 1926
revenue act against taxes paid to q
State, eliminating much duplication
Prevalence of the estate tax wa:
discussed in hearings on the District
appropriation bill by the House Sub
committee on Appropriations for the
District and its purpose explained by
j. L. Jacobs, director of the fiscal re-
lations study, as follows:
"All of the States except Nevada
have their local inheritance or estate
tax. Under the present law of 1926
it "a local estate taxi would mean
that the Federal Government would
allocate 80 per cent Of the amount
it collects on inheritance or estate
taxes in the District of Columbia to
the District government, so it does
not mean any additional tax.
1T means that the estate tax now
being collected by the Federal Gov
ernment would be distributed between
the Federal and District of Columbia
Governments in the 'above proportion
of about 20-80. That is the plan in
operation in every State except Ne
vada."
Everybody for It."
Chairman Collins declared that
Everybody is for that" Everybody
probably is.
But the estate tax bill introduced
in the House goes further than mere
80 per cent of the 1926 Federal estate
tax base. 1t sets up a series of rates
which, together with the 80 per cent
clause, is designed to bring in an esti-
mated s750000 a year.
Generally speaking, the District OF
Columbia estate tax will bite deeper
into the smaller estates than the Fed
eral estate tax No exact estimates
are available as to how much more
than the 80 per cent Federal credit
will be obtained by the rate structure
in the District bill But it was pointed
out that there would have been no
excuse for a rate structure unless it
had been intended to cut deeper into
estates here than the 80 per cent
Federal credit. On account of the
difference in rate structure between
the Federal act and the District bill,
it would be possible that some estates
would pay less than the 30 per cent,
based on the rates, while others would
pay more.
Florida and several other States
have statutes which merely provide
that their estate tax shall be 80 per
cent of the 1926 levy. This brings in
revenue to the State without adding
any additional burdens to local tax
payers.
But the Federal Government some
time ago discovered that this 80 per
cent credit on the 1925 tax base was
taking away much of the revenue it
hoped for from these death taxes. So
in succeeding Federal revenue acts
there have been added additional Fed
eral estate taxes, which has no
credit allowable for death taxes paid
a State. In other words, the 80 per
cent credit to those who pay State
death taxes is confined to 80 per cent
of the tax as fixed in the 1926 act. But
over and above the rates fixed in the
1926 act the Federal Government has
added new, super taxes.
So the Federal Government takes far
more than 20 per cent of the total tax
paid returning as credit to the local
estate taxpayer only 80 per cent of
the 1925 act. This fact, it is argued,
makes more necessary than ever a
local estate tax which would
merely provide for collecting-as it's
share-80 per cent of the tax collected
by the Federal Government under the
1926 act.
Instead of following that simple
formula, the proposed District estate
tax sets up series of rates on a slid
ing scale, beginning at l per cent on
net estates not in excess of $5O000,
and running up to Is per cent on net
estates over s5,00O,0o0. Exemption to
the tax are based on the individual
beneflciary-such as $4,000 to the
widow of the decedent, $4,000 to the
husband, ETC., but the subtraction is
made from the gross estate" and not
from the "individual' share of the
estate.
In some respects this is more harsh
IN its effect on the taxpayer than the
100000 fiat exemption allowed by the
Federal estate tax law Of 1926, or the
$4,000 exemption allowed by subse-
luent super estate tax acts.
Maryland More Generous.
The District bill also is less generous
IN its exemptions from tax than near
BY Maryland, which has a so-called
collateral inheritance act. The District
bill in its 80 per cent provision, how
ever, is similar to the Maryland estate
tax law. The Maryland tax exempts
from specific death tax rate
left to the direct line,
such as father, mother, husband, wife,
child, lineal descendants.
The Maryland law also exempts
bequests left to the City of Baltimore,
and any county or municipality of the
State, and certain other bequests, such
as for religious and educational pur-