"1

of all." It is these families, with a competence lifting them above a severe struggle for bare physical necessities, which carry forward the world's civilizations. It is from these families that the great leaders of men come, and not from either of the two extremes of society, the very rich or the very poor. Excessive wealth discourages exertion, but a suitable reform of the laws of inheritance will remove from us many idle. persons who consume annually immense quantities of wealth, but contribute nothing to the support of the race, and who, leading idle lives, cultivate bad ideals and disseminate social poison. For the sake of the sons of the rich, as well as for the sake of the sons of the poor, we need a reform of the laws of inheritance.

A reform of the laws of inheritance of property will help us to approach that ideal condition in which the man that does not work shall not eat, and it will also tend to the equalization of opportunities so as to give all a fairer start in life, allowing each one to make such use of his opportunities as his capacity and diligence permit, and thus rendering inequalities, economic and social, less odious and injurious, more stimulating and helpful. This reform tends to make income a reward for service, thus realizing in a higher degree than at present the demands of justice. It must tend indirectly to discourage idleness and to encourage industry, and 1 Quoted on page 65 of Second Biennial Report of the Wisconsin State Tax Commission, Madison, Wisconsin, 1903.

to repress that gambling, speculative spirit which desires something for nothing, and wants to get a living without rendering an honest return of some kind.

LITERATURE

ADAMS, HENRY C., The Science of Finance. New York, 1898. Professor Adams treats inherited property as "income of property" as distinguished from "income from property," or income from service. He places the tax under the head of taxes on income. While the present writer has in earlier writings treated inherited property as income, it seems to him, as stated in this chapter, that a distinction must be made, and that while in some cases it must be so looked upon, in other cases such a view is not tenable. Dos PASSOS, BENJ. F., The Law of Collateral and Direct In

heritance, Legacy and Succession Taxation. St. Paul, 1895. A law book by a strong adherent of taxation of inheritances.

GILSON, NORMAN S., CURTIS, GEORGE, JR., HAUGEN, NILS P., Commissioners, Wisconsin State Tax Commission, Second Biennial Report. Madison, 1903. Ch. IV. Many tax commissions have treated the subject of inheritance taxation, but probably it has never been treated by an American tax commission more thoughtfully than in this report. MILL, JOHN STUART, Political Economy. London, 1876.

Bk. II, Ch. II. Everything which Mill writes is worth reading, and in his day his treatment of inheritance of property was a valuable contribution to the subject. Mill makes, however, a distinction between testate and intestate inheritance which is radically unsound, and which has not been followed by subsequent writers.

SELIGMAN, E. R. A., Essays in Taxation. New York, 1895. Ch. V. Professor Seligman's treatment of financial topics is always worthy of attention.

THOMAS, EDWARD A., About Wills and Testaments. The Forum, September, 1886. A popular and suggestive

treatment by one who has held a judicial position, and who advocates a far-reaching regulation with corresponding restriction of the power to make a will and testament. WEST, MAX, The Inheritance Tax. In Columbia University Studies. New York, 1893. This is a valuable monographic treatment of the subject.

APPENDIX A

A BILL

FOR A TAX ON GIFTS, INHERITANCES, BEQUESTS, LEGACIES, DEVISES, AND SUCCESSION IN CERTAIN CASES.

[Prepared by the Wisconsin Tax Commission, Senate Bill 331, S. 1903.1]

The people of the State of Wisconsin, represented in senate and assembly, do enact as follows:

SECTION I. A tax shall be and is hereby imposed upon any transfer of any property, real, personal or mixed, or any interest therein, or income therefrom in trust or otherwise, to any person, association, or corporation, except corporations of this state organized under its laws solely for religious, charitable or educational purposes, which shall use the property so transferred exclusively for the purposes of their organization within the state in the following cases:

First. When the transfer is by will or by the intestate laws of this state from any person dying possessed of the property while a resident of the state.

Second. When a transfer is by will or intestate law, of property within the state or within its jurisdiction and the decedent was a non-resident of the state at the time of his death.

Third. When the transfer is of property made by a resident or by a non-resident when such non-resident's property

1 The provisions relating to amount and rates of the taxation proposed are given. The administrative and local features of the bill are omitted.

is within this state, or within its jurisdiction, by deed, grant, bargain, sale or gift, made in contemplation of the death of the grantor, vendor or donor, or intended to take effect in possession or enjoyment at or after such death.

Fourth. Such tax shall be imposed when any such person or corporation becomes beneficially entitled, in possession or expectancy to any property or the income thereof, by any such transfer whether made before or after the passage of this act, provided that property or estates which have vested in such persons or corporations before this act takes effect shall not be subject to the tax.

Fifth. Whenever any person or corporation shall exercise a power of appointment derived from any disposition of property made either before or after the passage of this act, such appointment when made shall be deemed a transfer taxable under the provisions of this act in the same manner as though the property to which such appointment relates belonged absolutely to the donee of such power and had been bequeathed or devised by such donee by will; and whenever any person or corporation possessing such a power of appointment so derived shall omit or fail to exercise the same within the time provided therefor, in whole or in part, a transfer taxable under the provisions of this act shall be deemed to take place to the extent of such omission or failure, in the same manner as though the persons or corporations thereby becoming entitled to the possession or enjoyment of the property to which such power related had succeeded thereto by a will of the donee of the power failing to exercise such power, taking effect at the time of such omission or failure.

Sixth. The tax so imposed shall be upon the clear market value of such property at the rates hereinafter prescribed and only upon the excess of the exemptions hereinafter granted.

SECTION 2. When the property or any beneficial interest therein passes by any such transfer where the amount of the property shall exceed in value the exemption hereinafter specified, and shall not exceed in value twenty-five thousand dollars the tax hereby imposed shall be:

First. Where the person or persons entitled to any beneficial interest in such property shall be the husband, wife, lineal issue, lineal ancestor of the decedent or any child adopted as such in conformity with the laws of this state, or any child to whom such decedent for not less than ten years prior to such transfer stood in the mutually acknowledged relation of a parent, provided, however, such relationship began at or before the child's fifteenth birthday, and was continuous for said ten years thereafter, or any lineal issue of such adopted or mutually acknowledged child, at the rate of one per centum of the clear value of such interest in such property.

Second. Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister or a descendant of a brother or sister of the decedent, a wife or widow of a son, or the husband of a daughter of the decedent, at the rate of one and one-half per centum of the clear value of such interest in such property.

Third. Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the father or mother or a descendant of a brother or sister of the father or mother of the decedent, at the rate of three per centum of the clear value of such interest in such property.

Fourth. Where the person or persons entitled to any beneficial interest in such property shall be the brother or sister of the grandfather or grandmother or a descendant of the brother or sister of the grandfather or grandmother of the decedent, at the rate of four per centum of the clear value of such interest in such property.

Fifth. Where the person or persons entitled to any beneficial interest in such property shall be in any other degree of collateral consanguinity than is hereinbefore stated, or shall be a stranger in blood to the decedent, or shall be a body politic or corporate, at the rate of five per centum of the clear value of such interest in such property.

SECTION 3. The foregoing rates in section two are for convenience termed the primary rates.