(i). New York.-The law of New York was passed in 1885,1 but the Statute was amended in 1887, 1889 and 1890.2 This law is evidently based upon the Statutes of Pennsylvania existing prior to 1855, and with some few exceptions they differ little in substance from these early laws. The New York Statute was, however, drafted carelessly, and has been for that reason the cause of considerable judicial criticism. It has been well said, that the statute represents the crude and severe system as it existed under the Pennsylvania Act of 1826 without embodying the various amendments subsequently added thereto. But the revenue derived by the State is rapidly increasing each year under this important law, and in the course of a few years it will be one of the most remunerative taxes imposed, facts which call strongly for a more complete and systematic law upon the subject.*

1 Ch. 483, L. 1885, took effect June 30, 1885; Matter of Howe, 112 N. Y. 100, affg. 48 Hun, 235.

2 See Appendix; Law 1887, ch. 713; Law 1889, ch. 307; Id. ch. 479; Law 1890, ch. 553.

On January 7, 1890, Governor Hill, of New York, said in his message to the Legislature: "But it is respectfully suggested as worthy of the consideration of the Legislature, whether a satisfactory solution of the problem of taxing personal property may not be found in a graduated probate and succession tax upon the personal property of decedents, developing into a complete system the theory of the collateral inheritance tax. Already most estates of decedents are carefully appraised by disinterested parties through the machinery of our Surrogates' courts. Without going into details, it seems possible to devise a system requiring all estates of decedents over a certain valuation to be administered in a Surrogate's court, at least so far as to obtain an appraisal of the personal property thereof, and after allowing reasonable exemptions to the immediate next of kin, a percentage

20

tax may be imposed upon the remainder, reasonably graduated by an increasing percentage as the relationship of those who are to receive is more remote, and as the valuation of the estate is greater. The theory of such a graduated percentage tax is not harsh or inequitable. Such a system has, I am advised, existed for a long time in England and has worked well, and the propriety of its adoption here is suggested for your consideration." Table showing the Revenue derived from Collateral Taxes by the following States:

Total.

1886. 1887. 1888. 1889. New York....$84,128 $561,716 $736,062 $1.075,692 $2,457,598 Pennsylvania..662,976 763,871 713,434 1,378,458 3,518,739 Maryland.... Delaware... Connecticut...

...

913

45,597.

CHAPTER II.

NATURE OF TAX AND ITS CONSTITUTIONALITY.

§ 1. General power of State over taxation.

2. Collateral or inheritance tax is upon the privilege of succession to property.

3. Not a property tax.

4. Not a direct tax.

5. Taxing foreign real estate void as direct tax.

6. As to being a general or special tax.

7. Not a poll tax.

8. As to being equal and uniform.

9. Double taxation.

10. Not a taking of private property.

II. Need not state the object of tax. 12. As to notice and hearing.

13. Due process of law not violated.

14. As to being retro-active and ex post facto. 15. Not a tax upon exports or commerce.

16. Conflicting with treaties and alien rights.

17. Government bonds and State securities.

18. Legatee's or owner's domicile as to personal property and its

situs.

19. General questions as to State jurisdiction.

§ 1. General power of State over taxation.-In all matters appertaining to the domain of taxation, as to the subject matter of the tax, persons, method of valuation and the like, there can be no doubt that, as a general rule, the power of the several States is practically unlimited within their several jurisdictions, except where restricted or controlled by their constitutions or by the constitution and laws of the United States, and it is said that, in the exercise of this function, the Legislature possesses full, absolute

and sovereign power. Where the power of the State has not been thus interdicted, controlled or surrendered to the general government, its exercise rests in the sound discretion of the law making body.1

§ 2. Collateral or inheritance tax is upon the privilege of succession to property.—With these well settled principles in view, we will now consider briefly the various constitutional objections that have been frequently urged in the State and Federal courts against statutes imposing legacy and succession taxes, and it may be asserted that these objections have all finally tended to settle, first, the precise nature of the tax, as imposed by such laws; secondly, the power of the several States and of the general government, within the well known restrictions above named, to enact laws imposing the same.

It is now an established doctrine, that so far as the nature of the tax is concerned, such taxes are nothing more than a burden, bonus or assessment, as they have been variously defined, imposed by Government upon the passing, devolution, transmission or privilege of taking or receiving property under wills and intestate laws, whether such property passes to collateral or lineal heirs, and to prevent a fraudulent or intentional evasion of the tax, provisions have, in nearly all the statutes, also been inserted, making the tax applicable to all transfers

1 Cooley on Taxation, 2d ed. 5-7; McCulloch v. Maryland, 4 Wheat. 316; Kirtland v. Hotchkiss, 100 U. S. 491; Eyre v. Jacob, 1858, 14 Grat. 426; Matter of McPherson, 1887, 104 N. Y. 316; Railroad Company v. Penn. 1872, 15 Wall. 300, 319; Com's. App. (Bittinger's Est.), 129 Pa. St. 338.

made inter vivos intended to take effect at, upon or after the death of the transferrer.

The right to impose these taxes is based upon the broad, constitutional power of the State, as a sovereign, to modify, amend, extend or wholly to repeal the laws governing the transmission of property by will and intestate laws. Such laws confer, at the utmost, a mere privilege upon the heirs or other representatives of the decedent of succeeding to the estate, and the Legislature has the constitutional power to tax the privilege conferred, as it has the right to tax any other privileges within its jurisdiction.1

These principles will be found to be fully substantiated in the cases referred to in the notes.*

It will also be observed that the various statutory 3 provisions define the tax in substantially the same manner as that given above.

In one of the earliest cases decided in Virginia,' the rule above stated was announced and has ever since

1 See Chapter I, sec. 2.

2 Eyre v. Jacob, 1858, 14 Grat. 427; Miller v. Com. 1876, 27 Grat. 110; Tyson v. State, 1868, 28 Md. 577; State v. Dalrymple, 1889, 70 Md. 294; 17 Atl. Rep. 82; Matter of McPherson, 1887, 104 N. Y. 306; Mager v. Grima, 1850, 8 How. U. S. 490; Scholey v. Rew, 1874, 23 Wall. 331; Strode v. Com. 1866, 52 Penn. St. 181; Clymer v. Same, Id. 189; Com. v. Herman, 1885, 16 Wkly. N. C. 210; Wallace v. Myers, 1889, 38 Fed. Rep. 184; Pullen v. Commissioners, 1872, 66 N. C. 361. See, also, Matter of Howard, 1887, 5 Dem. 483; Williams' Case, 1827, 3 Bland Chanc. Rep. 186. In re Short's Est. 1851, 16 Penn. St. 63; Carpenter v. Penn. 1854, 17 How. 456; Peters v. Lynchburg, 1882, 76 Va. 927; Schoolfield v. Same, 1884, 78 Id. 366; Arnaud v. Holland, 3 La. 337

3 See Statutes N. Y., Penn., Md. and Conn., Appendix. 4 Eyre v. Jacob, 14 Grat. 427.