25

that the power has been exercised by the same government which regulates the succession to the property taxed; but this power is not destroyed by the dual character of our government, or by the fact that, under our constitution, the devolution of property is determined by the laws of the several states.'' 24 But Justice Holmes, in his dissenting opinion to Chanler v. Kelsey, says: "I always have believed that a state inheritance tax was an exercise of the power of regulating the devolution of property by inheritance or will upon the death of the owner-a power which belongs to the states; and I have been fortified in my belief by the utterances of this court from the time of Chief Justice Taney to the present day. For that reason the power is more unlimited than the power of a state to tax transfers generally, or the power of the United States to levy an inheritance tax. The distinction between state and United States inheritance taxes was recognized in Knowlton v. Moore; 26 and whatever may be thought of the decision in Snyder v. Bettman," I do not understand it to import a denial of the distinction reaffirmed by the dissenting members of the court."

§ 9. Origin and Extent of Inheritance Taxation.— Inheritance taxes are of ancient origin. Two thousand years ago they were imposed in Rome, the idea perhaps having been introduced from Egypt; and in the Middle Ages traces of such taxes were observable as an incident of feudal tenures. To-day England, France, Ger

24 Snyder v. Bettman, 190 U. S. 249, 47 L. Ed. 1035, 23 Sup. Ct. Rep. 803.

25 Chanler v. Kelsey, 205 U. S. 466, 51 L. Ed. 882, 27 Sup. Ct. Rep. 550.

26 Knowlton v. Moore, 178 U. S. 41, 44 L. Ed. 969, 20 Sup. Ct. Rep. 747.

27 Snyder v. Bettman, 190 U. S. 249, 47 L. Ed. 1035, 23 Sup. Ct. Rep.

many-in fact, practically all the nations of Europehave adopted some system of inheritance taxation; so, indeed, have many of the colonies of Great Britain, the Spanish-American countries, Japan, and other nations of the world. In the United States, before the end of the eighteenth century, the federal government began the taxation of inheritances. The first tax of this nature was imposed by the stamp act of July 6, 1797, which was repealed five years later. The next tax was imposed by the war revenue act of July 1, 1862, amended two years later, and repealed July 14, 1870. The income tax provisions of the revenue act of August 27, 1894, embraced inheritances, but the scheme being indivisible, the inheritance tax fell when the income tax was declared unconstitutional. The next and last inheritance tax imposed by Congress was by the war revenue act of June 13, 1898, which, so far as the imposition of taxes on inheritances is concerned, was repealed April 12, 1902.28

Pennsylvania, Virginia, Louisiana, Maryland, and North Carolina adopted inheritance taxes at quite an early date. Other states, from time to time, have also resorted to the taxation of inheritances, and this system of raising revenue has increased in favor, especially in the past few years, until the following states have an inheritance tax: Arkansas, California, Colorado, Connecticut, Delaware, Idaho, Illinois, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas,

28 Matter of McPherson, 104 N. Y. 306, 58 Am. Rep. 502, 10 N. E. 685; Estate of Morris, 138 N. C. 259, 50 S. E. 682; State v. Alston, 94 Tenn. 674, 28 L. R. A. 178, 30 S. W. 750; Pollock v. Farmers' Loan etc. Co., 158 U. S. 601, 39 L. Ed. 1108, 15 Sup. Ct. Rep. 912; Knowlton v. Moore, 178 U. S. 41, 44 L. Ed. 969, 20 Sup. Ct. Rep. 747.

Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming. Hawaii and Porto Rico have also adopted a system of inheritance taxation."

§ 10. Important Features of Inheritance Taxation. Some of the leading features of inheritance tax laws, at least of those recently adopted, are the exemption of estates of limited value; the exemption of gifts to charities; the exemption of gifts to lineal descendants, or the imposition on them of lower rates than on collateral relatives or strangers; and the graduation of the tax according to the value of estates or to the degree of relationship between donor and donee. Some statutes apply only to collateral relatives and strangers, exempting lineal descendants and the surviving husband or wife, but the modern tendency has been to tax all transmissions, whether to lineals or collaterals. This is illustrated by the California statute, which, when first enacted in 1893, imposed a collateral tax only, but which, as amended in 1905, applies to lineal descendants as well as to collateral relatives. An even more significant tendency appears in the adoption of progressive rates, whereby the rate of taxation is made to increase with the value of the estate, or with the remoteness of the relationship between the parties, or with both. Here is suggested an efficient means of limiting the size of inheritable estates and thereby reducing swollen fortunes without resorting to confiscatory measures or offending constitutional principles.

29 Dixon v. Ricketts, 26 Utah, 215, 72 Pac. 947; Knowlton v. Moore, 178 U. S. 41, 44 L. Ed. 969, 20 Sup. Ct. Rep. 747.

§ 27.

Double Taxation in Case of Nonresidence. § 28. Detention of Property in Safe Deposit.

§ 14. Constitutionality in General.-The constitutionality of the general principles of inheritance taxation has been affirmed by a multitude of decisions, so that the competency of Congress, or the legislatures of the several states, to impose an inheritance tax is universally conceded. The inherent justice and wholesomeness of this system of taxation have so appealed to the judicial mind that all the assaults that wealth, in its aversion to bear its just burdens, has conceived, have proved unavailing. The general doctrine that a state or the United States may raise revenue, and in bountiful quantities, by levying tribute upon estates in the course of transmission from decedents to their successors, is no longer doubted, and most of the attacks now made upon inheritance taxation are upon other than constitutional grounds.1

1 Walker v. People, 192 Ill. 106, 61 N. E. 489; Tyson v. State, 28 Md. 577; State v. Henderson, 160 Mo. 190, 60 S. W. 1093; Pullen v. Wake County Commrs., 66 N. C. 361; State v. Guilbert, 70 Ohio St. 229, 1 Ann. Cas. 25, 71 N. E. 636; Eyre v. Jacob, 14 Gratt. (Va.) 422, 73 Am.

No express constitutional authority is requisite in order to empower a state legislature to lay an inheritance tax. The power to tax is an inherent incident of the power to legislate, and it is necessary, so far as concerns the authority of the legislature to impose inheritance taxes, only that the constitution does not, either expressly or by necessary implication, prohibit such taxation; and the enumeration in the constitution of certain subjects of taxation should not be construed as such a prohibition. This is obvious in view of the familiar principle that constitutions are not, as to the several commonwealths of the Union, grants of power, but restrictions upon powers otherwise unlimited, and the law-making branch of a state government may legislate on any subject and enact any law not inhibited by the constitution of the state or of the United States.2

Dec. 367; Magoun v. Illinois Trust etc. Bank, 170 U. S. 283, 42 L. Ed. 1037, 18 Sup. Ct. Rep. 594; Knowlton v. Moore, 178 U. S. 41, 44 L. Ed. 969, 20 Sup. Ct. Rep. 747.

"We entertain no doubt," says the New York court of appeals, "that such a tax can be constitutionally imposed. The power of the legislature over the subject of taxation, except as limited by constitutional restriction, is unbounded. It is for that body, in the exercise of its discretion, to select the objects of taxation. It may impose all the taxes upon lands, or all upon personal property, or all upon houses or upon incomes. It may raise revenue by capitation taxes, by special taxes upon carriages, horses, dogs, franchises and upon every species of property, and upon all kinds of business and trades": Estate of McPherson, 104 N. Y. 306, 58 Am. Rep. 502, 10 N. E. 685.

2 Estate of Booth v. Commonwealth, 130 Ky. 88, 33 L. R. A., N. S., 592, 113 S. W. 61; Garth v. Switzler, 143 Mo. 287, 60 Am. St. Rep. 653, 40 L. R. A. 280, 45 S. W. 245; State v. Vinsonhaler, 74 Neb. 675, 105 N. W. 472; State v. Vinsonhaler (Neb.), 133 N. W. 472; State v. Wash. 439, 71 Pac. 20.

Clark, 30

A constitutional provision that taxes shall be levied on such property as the legislature shall prescribe does not, by the rule of exclusion, prevent a tax on privileges-at least where the constitutional debates indicate that it was not intended to deal with the taxation of privileges, and the practical construction for many years has assumed that it did not: Nunnemacher v. State, 129 Wis. 190, 9 Ann. Cas. 711, 9 L. R. A., N. S., 121, 108 N. W. 627.