Court Opinion

ID: 9442283
Source: CourtListenerOpinion
Date Created: 2023-08-03 18:42:18.436374+00
Date Added: 2024-06-11T17:29:02.625217
License: Public Domain

SWAN, Circuit Judge
(dissenting in part).
I am unable to agree with so much of the opinion as affirms the imposition of gift taxes on the bank deposits. Provisions exempting from estate taxes insurance and bank deposits of a non-resident not engaged in business in the United States first appeared in § 403(b) (3) of the Revenue Act of 1921, 42 Stat. 227, 280. No gift tax was then in force. The purpose of such exemption was to enable American insurance companies and banks to compete with foreign underwriters and banks. Senate Rep. No. 275, 67th Cong. 1st. sess. In the Revenue Act of 1924, 43 Stat. 253, 307, the exemption was carried forward as section 303(e), 26 U.S.C.A.Int.Rev.Acts, page 71, in the chapter dealing with estate taxes but did not appear in the chapter imposing a gift tax. Unless the exemption were construed to be applicable also to the gift tax the purpose of the estate tax exemption would be frustrated, in part at least. The Revenue Act of 1926, 44 Stat. 9, 26 U.S.C.A.Int.Rev.Acts, page 145 et seq., repealed the 1924 gift tax and continued the estate tax exemption by section 303(e). Consequently from 1926 to 1932 American insurance companies and banks were under no disadvantage in competing with foreign concerns for the business of non-resident depositors or applicants for life insurance.
The estate statute and the gift tax statute are in pari materia and must be construed together. If Congress had intended by the 1932 Act to deprive the American insurers and banks of advantages they had enjoyed for six years it seems likely that the legislative history would have disclosed such purpose. It does not. I think the literal words of § 1000(b) should yield to the purpose of the exemption. Merrill v. Fahs, 324 U.S. 308, 65 S.Ct. 655, 89 L. Ed. 963 inferentially tends to support this conclusion inasmuch as the majority opinion rejects Mr. Justice Reed’s view that omission of words from the gift tax which were included in the estate tax indicated Congressional intent to accord the rights involved different treatment.