$250 out of all estates, but that estates under $250 in value are exempted from any tax. In other words, an estate worth $250 escapes taxation, but one of $250 or over is subject to tax.'

'It is peculiarly within the province of the legislature to declare what privileges shall be taxed, and what exemptions may be allowed, in order to make taxes bear most lightly upon those least able to bear them, and the exemption of small estates is neither arbitrary, nor is it devoid of good reason, inasmuch as the expenses of administration are proportionately much greater in small than in large estates. In the various states, when such taxes are imposed, there is a similar exemption depending on the size or value of the estate."

Later the inheritance tax law of the state of Illinois was passed upon by the supreme court of that state. It was attacked as violating the state constitutional provisions requiring- uniformity in taxation. The court said:

"A tax which affects the property within a specific class is uniform as to that class, and there is no provision of the Constitution which precludes legislative action from assessing a tax on that particular class. By this act of the legislature six classes of property are created heretofore absolutely unknown. It is those classes of property depending upon the estate owned by one dying possessed thereof which the state may regulate as to its descent and the right to devise. The tax assessed on classes thus created is absolutely uniform on the classes upon which it operates, and, under the provisions of the statute, is to be determined by valuation, so that every person and corporation shall pay a tax in proportion to the value of his, her, or its property inherited; and it is not inconsistent with the principles of taxation fixed by the constitution and is clearly within the sections of the Constitution quoted. No want of uniformity with one living who owns property can be urged as a reason why the statute makes an inconsistent rule. No person inherits property or can take by devise, except by the statute; and the State having power to regulate this question, may create classes and provide for uniformity with reference to classes which were before unknown." Kochersperger vs. Drake, 167 Ill., 122, (1897).

Minnesota has been years getting such a law which would stand a constitutional test. Four enactments were declared unconstitutional, but the fifth effort proved valid. In passing on this last law the supreme court of that state said:

"Authority to classify persons and property for the purpose of taxation is well settled. When based upon some reasonable and practical rule, founded on such substantial difference of situation or circumstances as to reasonably suggest the propriety of a distinction, or based upon some rule of public policy, the courts sustain various forms of classifications. ****** Graduated or pro

gressive taxation is intimately associated with that of classification, and perhaps amounts, substantially, to the same thing. The progressive rule is applied to the income tax, which in principle is identical with the inheritance tax, the only difference being that the income tax is one upon the property, while the inheritance tax is upon the right of succession. It is applied in different forms, not materially dissimilar to that fixed by the statute under consideration, in all States and countries where the income or inheritance tax is in force, the amount of the income or inheri tance being made the basis for a different rate of taxation. The rule applied in our Sister States and by the Federal court sus tains the statute under discussion, whether it be termed a classi fied or a progressive tax. It is in a sense arbitrary, but not so unreasonable or unfair as to justify interference by the courts." State vs. Bazille, 97 Minn., 11 (1905).

But the supreme court of South Dakota declared unconstitutional such a law as Minnesota now has and it is doubtful if the law in Minnesota would stand a constitutional test if properly attacked.

A special committee appointed by the International Tax Association to draft a model inheritance tax law, in a report made to the association at its meeting in Milwaukee in 1910 recommended certain progressions as to relationship and amounts and provided for exemptions. Wisconsin had a similar law which had been - upheld by the supreme court of that state. Following is an extract of the opinion of the Wisconsin court which explains the features of the law and the reasons for upholding it:

"The progressive feature of the act involves greater difficulty. By this feature increased rates of taxation are imposed as the amount of the bequest increases. Thus, if one legatee receives $25,000 and another in the same degree of kinship receives $50,000, while they will both pay the same rate on $25,000, the second legatee will pay a higher rate on his second $25,000. It is said that this is rank discrimination, that there is no difference in situation justifying a difference in classification, and that classification of persons cannot be based on mere difference in ability to pay. If this question were an original one, it would seem serious. It is somewhat persuasive to note that railroad license taxes have been levied upon the progressive plan, increasing as the earnings per mile increase since 1876 without question, and that street railroads and electric-lighting companies are now subject to a like progressive rate of taxation. This fact would not, of course, be conclusive. The question has, however, been met in other courts, and it has been held with substantial uniformity that the progressive feature does not violate the general guaranties of equality and equal protection of the laws contained in the various state constitutions and in the fourteenth amendment to

the Constitution of the United States. The decision of the Supreme Court of the United States as to the force of the fourteenth amendment is necessarily conclusive, and as the general equality guaranties of our own Constitution are substantially the equivalent of the equal protection of the laws guaranteed by the fourteenth amendment, we are content to follow the decisions of the United States Supreme Court, and hold that the progressive feature does not violate the Constitution.' Nunnemacher vs. State, 129 Wis., 190, (1906.)

The constitution of North Dakota provides that "laws shall be passed taxing by uniform rule all property." This is the general constitutional provision in the states of the union. The decisions above discussed would apply to our own state when passing on the constitutionality of an inheritance tax law.

CHAPTER 14.

RECOMMENDATIONS.

In accordance with the suggestions contained in Chapter 5 of this report, relating to the classification of property, it is urged that the legislature pass the concurrent resolution, passed by the twelfth legislative assembly, amending Section 176 of the constitution in such manner as to permit classification of property for purposes of taxation and requiring uniformity within the class.

For the reasons set forth on page 57 of this report we recommend that the provisions of the statute covering the assessment of bank stock, which authorizes the subtraction of five per cent of the loans and discounts from the surplus and reserve funds and undivided profits be stricken from the statute.

For the reasons set forth on page 59 of this report we recommend that the provision of the statute regulating the assessment of bank stock which authorizes the subtraction of the net investment in real estate be so amended as to limit the total amount of investment in real estate that may be deducted to the amount the bank is authorized to invest under Chapter 54 of the Laws of 1911.

For the reason set forth on page 61 of this report we recommend that Section 1528 be amended in such a way as to authorize the review of individual assessments of bank stock by the county board of review and equalization, thus making it possible for the county board of review and equalization to alter individual assessments of bank stock in various taxing districts, whereas now, they may only equalize between districts, except in the unorganized townships.

We further recommend that Section 1508 of the Code of 1905 be so amended as to apply expressly to the assessment of stock in savings banks and trust companies. See page 62 of this report.

We recommend that Section 1503 of the Code of 1905 be so amended as to provide the following formula for the valuation of "corporate excess," market value or actual, value of stock plus indebtedness, except for current expenses, minus the value of real and personal property, or preferably that the section be entirely repealed. See pages 67 to 71.

For the reasons set forth in Chapter 8 we recommend the passage of a law similar to the law, passed by the legislature of