[References are to pages] Blair v. Herold, 150 Fed. 199; aff. 158 Fed. 804... 93 486 Board of Education v. Illinois, 203 U. S. 553, 27 S. Ct. Rep. 171.... 35 Bullen v. Wisconsin, 240 U. S. 625, 36 S. Ct. Rep. 473... Dale v. Pattison, 234 U. S. 399, 34 S. Ct. Rep. 785..... Hawley v. Malden, 232 U. S. 1, 34 S. Ct. Rep. 201.. Heberton v. McClain, 135 Fed. 226.... Herold v. Shanley, 146 Fed. 20, 76 C. C. A. 478....... 1088 .15, 85 32 29 .111, 113 29 253 33 235 247. 486 ...203, 486 448 32 258 ..13, 14, 491 Kahen v. Herold, 147 Fed. 575; aff. 86 C. C. A. 598, 159 Fed. 608, Keeney v. New York, 222 U. S. 525, 32 S. Ct. Rep. 105.. Kintzing v. Hutchinson, Fed. Cas. 7834.. Knowlton v. Moore, 178 U. S. 41, 20 S. Ct. Rep. 747......... National S. D. Co. v. Stead, 232 U. S. 58, 34 S. Ct. Rep. 209... 29 .113, 143 352 ... 445 .26, 522 169 Page v. Edmunds, 187 U. S. 596, 23 S. Ct. Rep. 200... 260 Plummer v. Coler, 178 U. S. 115, 20 S. Ct. Rep. 829.. Scudder v. Comptroller, 175 U. S. 32, 20 S. Ct. Rep. 26.... 443 448 Smith v. Reeves, 178 U. S. 436. 451 Snyder v. Bettman, 190 U. S. 249, 23 S. Ct. Rep. 803.. 11 Stickney v. Kelsey, 209 U. S. 419, 28 S. Ct. Rep. 508.. 443 Sturges v. United States, 117 U. S. 363, 6 S. Ct. Rep. 767.. 29 Tilt v. Kelsey, 207 U. S. 43, 28 S. Ct. Rep. 1........39, 40, 404, 406, 443 [References are to pages] U. S. v. N. Y. Ins. & Trust Co., Fed. Cas. 15873.... U. S. v. Perkins, 163 U. S. 625, 16 S. Ct. Rep. 1073... U. S. v. Trucks, 27 Fed. 541.. U. S. v. Tappan, Fed. Cas. 16431.... Vanderbilt v. Eidman, 196 U. S. 480, 25 S. Ct. Rep. 331.. Wallace v. Myers, 38 Fed. 184.... Wheeler v. Sohmer, 233 U. S. 434.... Yazoo and Miss. Ry. Co. v. Adams, 180 U. S. 1, 21 S. Ct. Rep. 240.. 35 ENGLAND Austin v. Boys, 27 L. J. Ch. 714....... Blackstone's Commentaries, Lewis Ed., Vol. II, p. 180.. 283 123 154 153 48 Hyde v. Hyde, 1 P. & D. 130..... 154 Lyte et Ux v. Peny, Easter Term, 23 Hen. VIII. 69 .285, 288 Page v. Ratliffe, 75 L. T. Rep. 371.. Warrender v. Warrender, 2 C. & F. 488. .284, 285, 288 154 Yelverton v. Yelverton, 1 Sw. & Tr. 574. 154 INHERITANCE TAXATION PART I- THE TAX A. Not a Tax on the Property but on the Privilege of Transmitting and Inheriting It. 1. Review of the Authorities. 2. The Privilege Taxed. 3. Statutes Held Invalid. 4. Practical Application of the Rule. a. Not a Direct Tax to be Apportioned among the States. d. Personalty of Resident Taxed though in Foreign Juris- e. Intangibles of Nonresident within the State Taxable. f. Double Taxation. B. The Transfer Takes Place at Death. 1. Vested Right of the State. 2. Renunciation by Legatee. 3. Law in Force at Date of Proceedings Controls Procedure. 4. Rights Vested Prior to Death Cannot be Taxed. 5. Amendment and Repeal. 6. Gains or Losses during Administration. 7. Exceptions to the Rule. a. By the Nature of the Transfer. b. By Statute. C. General Rules of Construction. 1. Strict or Liberal. 2. Exemptions. 3. Retroactive or Prospective. 4. Notice and a Hearing Essential. 5. Copied or Adopted Statutes. 6. Practical Construction. D. Conflict of Laws. 1. Jurisdiction. 2. "Full Faith and Credit." 3. Proof of Foreign Laws. 4. As to Sister States. 5. As against Aliens Protected by Treaties. PART I-THE TAX Inheritance taxation has come to be a distinct department of jurisprudence. Although it is necessarily purely statutory the statutes are are based upon fundamental doctrines which are peculiar to this subject. In order to understand it scientifically and tread the maze of statutes and decisions with a clear comprehension of the principles from which they spring and the substantial foundations of justice upon which the courts endeavor to rest them there are two cardinal doctrines that should be thoroughly grasped. There is hardly a litigation in all the thousands of controversies that have arisen over inheritance taxation that does not involve one or both of them. They are: (a) That the tax is not a property tax; but an excise or impost upon the right to transmit property at death; or upon the right to succeed to it from the dead. (b) That the tax accrues because of and at the death of the owner; that the rights and liabilities of the state and the beneficiaries date from that event; and that the value of the property transmitted or received, which measures the value of the inheritance, is taken at that date. A.- NOT A TAX ON PROPERTY BUT ON THE RIGHT TO RECEIVE AND INHERIT IT. If an inheritance tax is construed as a tax upon the property of a decedent, such a tax necessarily violates the universal constitutional requirements that taxation shall be equal in its burdens and uniform in its application. No just property tax could be levied that was unequal and not uniform. No just inheritance tax could be imposed that did not make exemptions to the widow and the orphan or that taxed their patrimony equally with the succession of distant relatives and strangers. An annual tax levy that asseessed Farmer Jones, on one side of the street, at 2%, and Farmer Robinson, on the other side of the street, at 5% of the value of their respective farms would obviously be unjust, tyrannical, oppressive and intolerable. But if Farmer Jones leaves his farm to his widow and his son and Farmer Robinson devises his acres to cousins in Norway, a tax on the transfer by Jones at 2% and on that by Robinson at 5% is recognized as just and equitable. Moreover, it is generally thought that a fortunate youth who inherits a sum sufficient to class him with the "idle rich" should pay more, proportionately, for the privilege than the son of the poor man who merely gets a fair start in life as the result of his father's industry and solicitude and his mother's life-long sacrifices and economies. While these considerations are applicable to the taxation of inheritances they are fundamentally obnoxious to the principles of ordinary taxation - hence the vital importance of the initial proposition that such taxes are not levied upon property, but upon the right to transmit and inherit it. 1. Review of Authorities. The leading cases in all the states deal with the problem and arrive at a nearly unanimous view; but to apply it as we must throughout this treatise a review of these authorities is necessary. |