§ 6. Other Concepts of Tax.-The Massachusetts court defines the inheritance tax as "an excise tax, imposed not only upon the right of the owner of property to transmit it after his death, but also upon the privilege of his beneficiaries to succeed to the property thus dealt with." This definition is comprehensive, covering, as it does, both the right to transmit and the right to succeed."

Sometimes the inheritance tax is denominated an excise or duty upon the right or privilege of taking property by will or descent, in contradistinction to a direct tax on property.10 It "is not a tax upon property or property rights in any sense, but purely an excise tax levied upon the transfer or transmission, and merely measured in amount by the amount of the property transferred." 11

The Pennsylvania court has spoken of the inheritance tax as "a diminution of the amount that otherwise would pass under the will or other conveyance." This characterization of the tax was made in a case where it was contended that a bequest to charities was exempt. But, to quote from the opinion of the court, "there is no kind of exception, qualification, condition, or reservation as to what it is that is the subject of the tax. It is the whole of the estate that passes. There is no exemption from the tax in favor of char

• Attorney General v. Stone (Mass.), 95 N. E. 395.

10 Minot v. Winthrop, 162 Mass. 113, 26 L. R. A. 259, 38 N. E. 512; State v. Hamlin, 86 Me. 495, 41 Am. St. Rep. 569, 25 L. R. A. 632, 30 Atl. 76; Estate of Keeney, 194 N. Y. 281, 87 N. E. 428; Estate of Stixrud, 58 Wash. 339, Ann. Cas. 1912A, 850, 33 L. R. A., N. S., 632, 109 Pac. 343; Knowlton v. Moore, 178 U. S. 41, 44 L. Ed. 969, 20 Sup. Ct. Rep. 747.

"The tax is not one of the expenses of administration, or a charge upon the general estate of the decedent, but is in the nature of an impost tax or tax upon the right of succession": Estate of Chesney, 1 Cal. App. 30, 81 Pac. 679.

11 Beals v. State, 139 Wis. 544, 121 N. W. 347; Estate of Bullen, 143 Wis. 512, 139 Am. St. Rep. 1114, 128 N. W. 109.

ities. That which the legatee gets and keeps is the aggregate sum bequeathed, less the amount of the tax. The tax must be retained by the person who has the decedent's property in charge. It is therefore not a tax upon the property or money bequeathed, but a diminution of the amount that otherwise would pass under the will or other conveyance, and hence that which the legatee really receives is not taxed at all. It is that which is left after the tax has been taken off. It is only imposed once, and that is before the legacy has reached the legatee, and before it has become his property. If the tax were a continuing charge imposed year by year after the ownership of the legacy has become vested in the legatee, there would then be room for the claim that it is free because of its charitable character. Being held for charitable purposes, it would come within the description of property exempted from taxation for that reason. But it is quite clear that it cannot have the benefit of that privilege while it is in a state of transition, and before it has become ultimately vested in the possession of the

And the Kentucky court, in holding that it is not against the policy of the law to enforce the inheritance tax upon a fund devised to a public school, has this to say relative to the nature of the tax: "The act authorizing the imposition of this tax makes no exemption in favor of either legatees who may be indebted to the estate, or charitable or religious institutions. The tax is not levied upon the fund, but upon its transmission, and hence the argument that it is against the policy of the law to levy a tax upon a fund devised to a public school has no bearing upon the case at bar, for the reason that this fund does not become a fund devoted to the maintenance of a school

12 Estate of Finnen, 196 Pa. 72, 46 Atl. 269.

until the law relative to its transmission has been complied with. The tax must be paid before the fund in question can become the property of the school or be devoted to educational purposes.

99 13

"A precise definition of the nature of this tax," observes the New York court of appeals, "is not essential, if it is susceptible of exact definition. Thus far, in this court, we have not thought it necessary, in the cases coming before us, to determine whether the object of taxation is the property which passes, or not; though, in some, expressions may be found which seem to regard the tax in that light. The idea of this succession tax, as we may conveniently term it, is more or less compound; the principal idea being the subjection of property, ownership of which has ceased by reason of the death of its owner, to a diminution, by the state reserving to itself a portion of its amount, if in money, or of its appraised value, if in other forms of property." 138

§ 7. Basis of Right of State Legislature to Impose Tax. The authority of the legislatures of the several states of the Union to impose an inheritance tax has usually been based on the power to regulate the transmission of and succession to the property of deceased persons. The devolution of such property, or the succession thereto, is by permission of the state. Hence the state is competent, acting within reasonable bounds, to prescribe such regulations and attach such conditions in granting the privilege or permission as it sees fit, whether the transmission is effected by testamentary act of the owner or by operation of law in case he dies intestate. And as an incident to such

13 Leavell v. Arnold, 131 Ky. 426, 115 S. W. 232.

13a Estate of Swift, 137 N. Y. 77, 18 L. R. A. 709, 32 N. E. 1096, quoted in Estate of Sanford, 126 Cal. 112, 45 L. R. A. 788, 54 Pac. 259, 58 Pac. 462.

regulation, and as one of such conditions, the legislature may impose an inheritance tax.1

"The principles upon which the tax is upheld," said the supreme court of California, "have been so fully

14 People v. Griffith, 245 Ill. 532, 92 N. E. 313; Booth v. Commonwealth, 130 Ky. 88, 113 S. W. 61; Allen v. McElroy, 130 Ky. 111, 113 S. W. 66; Union Trust Co. v. Durfee, 125 Mich. 487, 84 N. W. 1101; Gelsthorpe v. Furnell, 20 Mont. 299, 39 L. R. A. 170, 51 Pac. 267; Plummer v. Coler, 178 U. S. 115, 44 L. Ed. 998, 20 Sup. Ct. Rep. 829. "Upon general principles, the right to tax the succession or inheritance of property is founded on a reasonable basis, since the right of any person to succeed to property of a deceased person, whether by will or inheritance, is a creature of statute law. . . . . As the right to succeed depends upon the law of the state, it follows that the state may regulate that right as public necessity or policy may dictate, and may subject it to such burdens and reasonable conditions as may best subserve the purposes of the state. It must be borne in mind that the tax is not upon the property, but the right or privilege of acquir ing it by succession": State v. Alston, 94 Tenn. 674, 28 L. R. A. 178, 30 S. W. 750.

The legal basis for inheritance taxes is stated in United States v. Perkins, 163 U. S. 625, 41 L. Ed. 287, 16 Sup. Ct. Rep. 1073, as follows: "Though the general consent of the most enlightened nations has from the earliest historical period recognized a natural right in children to inherit the property of their parents, we know of no legal principle to prevent the legislature from taking away or limiting the right of testamentary disposition or imposing such conditions upon its exercise as it may deem conducive to public good. In this view, the so-called inheritance tax of the state of New York is in reality a limitation upon the power of a testator to bequeath his property to whom he pleases-a declaration that, in the exercise of that power, he shall contribute a certain percentage to the public use. In other words, that the right to dispose of his property by will shall remain, but subject to a condition that the state has a right to impose. Certainly, if it be true that the right of testamentary disposition is purely statutory, the state has a right to require a contribution to the public treasury before the bequest shall take effect. Thus the tax is not upon the property, in the ordinary sense of the term, but upon the right to dispose of it, and it is not until it has yielded its contribution to the state that it becomes the property of the legatee. This was the view taken of a similar tax by the court of appeals of Maryland in State v. Dalrymple, 70 Md. 294, 299, 3 L. R. A. 372, 17 Atl. 82, in which the court observed: 'Possessing, then, the plenary power indicated, it necessarily follows that the state in allowing property ... to be disposed of by will, and in designating who shall take such property when

and clearly elaborated that it is necessary to do no more than to refer to the cases. The right of inheritance, including the designation of heirs and the proportions which the several heirs shall receive, as well as the right of testamentary disposition, are entirely matters of statutory enactment, and within the control of the legislature. As it is only by virtue of the statute that the heir is entitled to receive any of his ancestor's estate, or that the ancestor can divert his estate from the heir, the same authority which confers this privilege may attach to it the condition that a portion of the estate so received shall be contributed to the state, and the portion thus to be contributed is peculiarly within the legislative discretion.'' 15

The majority of the courts go so far as to declare that the right to transmit or receive property by will or descent is a mere creature of statute, a privilege existing purely by grace of the legislature, and as the legislature may withhold the privilege or confer it at pleasure, it may impose any condition upon the enjoy

there is no will, may prescribe such conditions, not in conflict with or forbidden by the organic law, as the legislature may deem expedient. These conditions, subject to the limitation named, are consequently wholly within the discretion of the general assembly. The act we are now considering plainly intended to require that a person taking the benefit of a civil right secured to him under our laws should pay a certain premium for its enjoyment. In other words, one of the conditions upon which strangers and collateral kindred may acquire a decedent's property, which is subject to the dominion of our laws, is that there shall be paid out of such property a tax of two and one-half per cent into the treasury of the state. This, therefore, is not a tax upon the property itself, but is merely the price exacted by the state for the privilege accorded in permitting property so situated to be transferred by will or by descent or distribution.'"

This extract from United States v. Perkins, 163 U. S. 625, 41 L. Ed. 287, 16 Sup. Ct. Rep. 1073, is quoted with approval in Estate of Stixrud, 58 Wash. 339, Ann. Cas. 1912A, 850, 33 L. R. A., N. S., 632, 109 Pac. 343.

15 Estate of Wilmerding, 117 Cal. 281, 49 Pac. 181; Estate of Stanford, 126 Cal. 112, 45 L. R. A. 788, 58 Pac. 462.