Court Opinion

ID: 9469753
Source: CourtListenerOpinion
Date Created: 2023-08-05 02:48:08.349458+00
Date Added: 2024-06-11T17:41:32.743593
License: Public Domain

FULLAM, District Judge,
Sitting by Designation, concurring:
I concur in the result, and in much of what is said in both of the Opinions of the other members of the Panel. The issue in this case is the correct amount of the federal estate tax, not the actual determination of the potential liability for Pennsylvania inheritance tax. The correct calculation of the federal estate tax depends upon whether or not, at the date of decedent’s death, there was a non-negligible possibility that the residuary bequest to charity might be further reduced by the ultimate assessment and collection of Pennsylvania inheritance tax on the corpus of the marital trust fund at the rate of 15%, rather than the 6% asserted by the taxpayer. This, in turn, requires a weighing of the probabilities in two respects: (1) the probability that the testator’s widow might fail to exercise her powers of appointment, so that the corpus of the marital trust might eventually pass, under the terms of the will, to decedent’s stepgrandchildren; and (2) the probability that, if that should occur, a 15% Pennsylvania inheritance tax on the corpus of the marital trust would be payable.
We all agree that the district court correctly decided that there is a non-negligible possibility that the widow might fail to exercise her powers of appointment. And we all agree that this means that the result reached in the district court cannot stand. In Judge Garth’s view, this is because Pennsylvania law provides for a 15% tax rate in such situations, and the law is not unconstitutional. In Judge Becker’s view, the district court’s judgment on this claim does not bind the State, is advisory, because it cannot affect the taxpayer’s federal estate tax liability under I.R.C. § 2055, Treas. Reg. § 20.2055-2 and Estate of Brooks v. *424Commissioner, 250 F.2d 937 (3d Cir. 1958), and if the State is bound, the Tax Injunction Act, 28 U.S.C. § 1341 (1976), deprived the district court of jurisdiction.
In my view, the Tax Injunction Act cannot properly be read to preclude a federal court from making the kind of prediction required for determining the correct federal estate tax. Neither does the Tax Injunction Act preclude a federal court, en route to its predictive assessment, from expressing the view that a constitutional challenge to a state inheritance tax statute would be unlikely to succeed. And, while I agree with Judge Becker that § 2055(c) of the Internal Revenue Code requires us, at the very least, to indulge a strong presumption of the validity of state tax laws, I cannot accept an absolutist approach in this area. If, for example, the Pennsylvania inheritance tax statute provided for the higher rate of tax on the estates of decedents of a particular nationality or religious faith, or upon the estates of decedents whose surnames begin with “K”, I believe such obvious unconstitutionality could properly be taken into account by a federal court in assessing the probabilities in this context.
In my view, therefore, it would suffice for disposition of the present case to hold merely that the likelihood of a constitutional application of a 15% tax rate in this situation is not so remote as to be negligible. And that ultimate conclusion follows, a fortiori, from the fact that, for the reasons stated by Judge Garth in Section IIB of his Opinion, the Pennsylvania statute plainly does not violate the Equal Protection Clause.
I therefore agree that the judgment must be reversed, and the case remanded for further proceedings to consider the computational issues raised by the appellee.