the burden of taxation should take cognizance of this condition and obtain a portion of its revenue from estates at the time of their transfer to hands that have given no evidence of ability to manage them economically. Such a tax, if the rate be moderate, can only further the true social function of devise and descent, i.e., the furtherance of the creation and the judicious management of wealth. The tax is an incentive rather than a hindrance to the creation of wealth and insures that after its transfer at death a certain portion at least will serve a socially useful purpose." (Address by Dr. Robert H. Whitten, in 1901, before the National Tax Conference.) CHAPTER IV. HISTORY. 15. Early History. § 16. State Statutes Copied from other States. 17. The Present Situation. § 18. History of Federal Legislation. Sec. 15. Early History. Inheritance taxes have been imposed since very early times,1 the earliest mention of them being in Egypt. The tax is no new invention of the legislative power for the purpose of putting money in the public coffers. Gibbon, the historian, traces its origin to the Emperor Augustus, and says it was suggested by him to the senate as a means of supporting the Roman army; that it was imposed at the rate of five per cent, upon all legacies or inheritances above a certain value, but that it was not collected from the nearest relatives upon the father's side; and that the tax was most fruitful as well as most comprehensive. It was called "vicessima hereditatum et legatorum." This method of taxation has been long resorted to in European countries, and was introduced into Great Britain by Lord North and adopted in 1780. Of the states of the American Union, Pennsylvania was the first to adopt it, in 1826, since which date it has been adopted as a means of governmental support by a great many other states.* Such taxes were recognized by the Roman law. They were adopted in England in 1780, and have been much extended since that date. Such taxes are now in force generally in the countries of Europe. In the United States they were enacted in Pennsylvania in 1826; Maryland, 1844; Delaware, 1869; West Virginia, 1887, and still more recently in Connecticut, New Jersey, Ohio, Maine, Massachusetts, 1891; Tennessee in 1891, chapter 25, now repealed by chapter 174, acts 1893. They were adopted in North Carolina in 1846, but repealed in 1883, were enacted in Virginia in 1884, repealed in 1885, re-enacted in 1863, and repealed in 1884.8 The practice has long been resorted to in European countries and was introduced in England in the last century, and was en larged from time to time till 1853, when it was extended to all successions to real property, chattels real, and a vast variety of personal property and rights." 1Appeal of Nettleton, 76 Conn. 235, 241, 56 A. 565. State v. Bazille, 97 Minn. 11, 16, 106 N. W. 93, 6 L. R. A. (N. S.) 732. Knowlton v. Moore, 178 U. S. 41, 48, 49, 20 S. Ct. 747, 44 L. Ed. 969. The early history of the inheritance tax is traced by Max West in his learned monograph on the inheritance tax, pages 11 et seq. Mr. West states that the earliest known inheritance tax was imposed in Egypt in the seventh century before Christ; that the Romans copied the idea from the Egyptians; that it was imposed in Rome by the Emperor Augustus in the year 6 A.D., and prevailed for about two hundred and fifty years. Under the feudal system the inheritance tax, as Mr. West observes, was represented by the relief and heriot. Mr. West suggests that the relief and heriot are probably feudal in their origin and are not copied from the Roman tax. Inheritance taxes during the seventh century were imposed in Germany and the Netherlands and in Italy before the close of the fourteenth century and at various times since. 31 Gibbon's Rome, 133; Encyc. Brit. (8th Am. Ed.) 65, tit. "Taxation." 4 In re Morris, 138 N. C. 259, 50 S. E. 682. Gibbon's Decline and Fall of the Roman Empire, vol. 1, pp. 163-4. • Dowell's History of Taxation in England, 148; Acts 20 George III, c. 28; 45 George III, c. 28; 16 and 17 Vict., c. 51; Green v. Croft, 2 H. Bl. 30; Hill v. Atkinson, 2 Merivale 45. 7 "Review of Reviews," February, 1893. 8 Per Wilkes, J., in State v. Alston, 94 Tenn. 674, 30, S. W. 750, 751, 28 L. R. A. 178, quoted with approval in Magoun v. Illinois Trust & Savings Bank, 170 U. S. 283, 287, 18 Sup. Ct. 594, 42 L. Ed. 1037. 'State v. Hamlin, 86 Me. 495, 498, 30 A. 76, 41 A. St. Rep. 569, 25 L. R. A. 632. Sec. 16. State Statutes Copied from Other States. The early New York act has been followed very closely in Illinois,1 Maine, Michigan, and Wisconsin, and with some changes in New Jersey.5 The Maine statute has been the model for legislation in Kentucky and Ohio, which also follows the Virginia act. The Tennessee statute is copied after Pennsylvania, and the New Hampshire act after Massachusetts, and the Utah act after Iowa.10 1 People v. Griffith, 245 Ill. 532, 92 N. E. 313. See statement in In re Inheritance Tax, 23 Colo. 492, 493, 48 P. 535. 2 State v. Hamlin, 86 Me. 495, 500, 30 A. 76, 41 Am. St. Rep. 569, 25 L. R. A. 632. Stellwagen v. Durfee, 130 Mich. 166, 89 N. W. 728, 8 Detroit Leg. N. 1204. Miller v. McLaughlin, 141 Mich. 425, 104 N. W. 777, 12 Detroit Leg. N. 501. In re Stanton, 142 Mich. 491, 105 N. W. 1122, 12 Detroit Leg. N. 829. 'Wis. St. 899, c. 355, is in all essential respects a literal copy of the New York law, N. Y. St. 1892, c. 399, with the important exceptions that in the New York law all transfers to collateral kindred and strangers of the value of five hundred dollars or over are taxed, while in the Wisconsin law such transfers are not taxed unless they equal or exceed ten thousand dollars; and in New York the tax is imposed upon transfers of both real and personal property, while in Wisconsin it is confined to personal property alone. Black v. State, 113 Wis. 205, 211, 89 N. W. 522, 90 Am. St. Rep. 853. Neilson v. Russell, 76 N. J. L. 655, 71 A. 286, 287, reversing 76 N. J. L. 27, 69 A. 476. Booth v. Commonwealth, 130 Ky. 88, 113 S. W. 61. Dyer v. Hagerty, 5 Ohio Cir. Dec. 701, 12 Ohio Cir. Ct. 606. Tenn. St. 1893, c. 174, is almost identical in terms with the Pennsylvania statute. English v. Crenshaw, 120 Tenn. 531, 110 S. W. 210. • Mann v. Carter, 74 N. H. 345, 347. 10 Dixon v. Rickets, 26 U. 215, 72 P. 47. Sec. 17. The Present Situation. Most civilized countries are today employing the inheritance tax as a source of revenue,1 and it is in force in the United States in all but a few states.2 Under different 'Now Employed in Nearly All Enlightened Countries. names the tax is now employed in nearly every civilized country, and is most highly developed in the Australasian states, where democratic ideas have taken the deepest root. It exists in Great Britain, France, Germany, Switzerland, the Netherlands, Belgium, Sweden, Norway, Denmark, Austria-Hungary, Italy, and nearly all of the other European countries. It is part of the revenue system of every state in the union except Alabama, Florida, Georgia, Indiana, Kansas, Mississippi, Nevada, Rhode Island, and South Carolina. In the Australasian colonies succession duties are among the chief source of revenue; and in some cases heavy progressive taxes have been imposed, not from fiscal considerations alone, but also for the purpose of breaking up large estates. The rates are progressive in all of the colonies, rising to ten per cent in Victoria, New South Wales, South Australia, and Western Australia, to thirteen per cent in New Zealand, and to twenty per cent in Queensland. It is stated upon the best authority that the institution of private property has not weakened, nor capital driven from the colonies, by these progressive taxes. They have given very general satisfaction and in almost every instance the rates have been increased after the tax has been in operation for a time. The graduation according to relationship is much less elaborate than in European countries; usually not more than two or three classes of relatives are distinguished. Report of Minnesota Tax Commission, 1910. 2 See tables, post, p. 1285. Sec. 18. History of Federal Legislation. Congress imposed a legacy tax in 1797 by the act of July 6, 1797, c. 11, 1 Stat. 527, which act was repealed June 30, 1802, 2 Stat. 148, c. 17. In this statute, as in the English legacy duty statute of 1780, the mode of collection provided was by stamp duties laid on the receipts evidencing the payment of the legacies or distributive shares in personal property, and the amount was, like the English legacy tax, charged upon the legacies and not upon the residue of the personal estate. A legacy tax was again enacted by the statute of 1862, 12 Stat. 433, 485, sections 111 and 112 of chapter 119, and repealed in 1870. This statute, like the act of 1797, was a tax imposed on legacies or distributive shares of personal property, but contained a new form of death duty. By section 194 a probate duty, proportioned to the amount of the estate and to be paid by way of stamps, was levied, and repealed in 1872. The result of the act of 1862 was to cause the death duties imposed by congress to greatly resemble those then existing in England; that is, first, a legacy tax, chargeable against each legacy or distributive share, and a probate duty chargeable against the mass of the estate. Thus it came to pass that the system of death duties prevailing in England and that adopted by congress were substantially identical, and of a threefold nature, that is, a probate duty charged upon the whole estate, a legacy duty charged upon each legacy or distributive share of personalty, and a succession duty charged against each interest in real property. The fact that the framers had in mind the English law was conclusively demonstrated by section 127, wherein the succession or real estate inheritance tax was defined in substantially similar terms to that contained in the English succession duty act. The parallel was observed by the court in Sholey v. Rew, 23 Wall. 331, 349.1 The tax was again enacted as a war measure in 1898 and repealed in 1902.2 1 Knowlton v. Moore, 178 U. S. 41, 50, 20 S. Ct. 747, 44 L. Ed. 969. 2 See post, p. 1264 et seq. |