Cornell Law Library Scholarship@Cornell Law: A Digital Repository Historical Theses and Dissertations Collection Historical Cornell Law School 1894 Inheritance and Succession Taxes J. John Hassett Cornell Law School Follow this and additional works at: http://scholarship.law.cornell.edu/historical_theses Part of the Estates and Trusts Commons, and the Tax Law Commons Recommended Citation Hassett, J. John, "Inheritance and Succession Taxes" (1894). Historical Theses and Dissertations Collection. Paper 14. This Thesis is brought to you for free and open access by the Historical Cornell Law School at Scholarship@Cornell Law: A Digital Repository. It has been accepted for inclusion in Historical Theses and Dissertations Collection by an authorized administrator of Scholarship@Cornell Law: A Digital Repository. For more information, please contact [email protected]. THE SIS INHERITANCE AND SUCCESSION TAXES Presented for the Degree of Bachelor of Laws by J. John Hassett Cornell University Ithaca, -------- New York 1894 IN T R 0 D U C T I 0 N. The almost total lack of a systematic treatise on the subject of lheritance and Succession Taxes in English and inaccessibility of those admirable treatises in Franch and German caused me to select this subject, which, upon careful investigation, proved to be a great deal broader tian I had anticipated and which my limited amount of time and space would allow iie to treat exhaustively in every particular. The position and objections of the different politi- al economists being so varied, although readily susceptible of claasification, caused me to simply aesignate the trend of their opinions, objections and arguments. The lack of time and space made it necessary that I should leave out my proposed chapter on "The trend of leg- islation on this subject". This necessarily limitet Chap- ter IV. to the decisions Of the New York courts. TABLE OF CONTENTS Page I. History of Inheritance and Succession Taxes 2 (a) Origin, (b) In England, (c) In United tates. 11. Such taxes considered from an Economic Standpoint point ................................... 9 111. Trendof the Legislaticn Upon the Subject... IV. Important Decisions with dpecial reference to New York .... ...................... l (a) Constitutionality, (b) Property Subject to the Tax, (c) Value of the Property, (d) Exemptions, (e) Practice. TABLE OF CASES. ... -- 0---- A*stor, Estate of, (20 Abb. i. C. 405)..........29 E'k Clerk',- M1ut. Ben. Ass. (22 Abb. N.C. 50) ...e28 Bird, Mvatter of, (32 U1. Y. t. Rep. 89 )20 Bittinger's Eatat (129 Pa. St. 338)..............17 Butler, Matter of (58 Hun 400)...................*24 Cager, Matter of (111 N. Y. 343)...................18 Catlin v. Trustees Trinity Col. (113 11. Y. 133). 27 Coleman'.s Estate, In re (28 At. Rep. 137) Co monwealth v. :iangy (82 Va. 883)................24, Commonwelth v. Sharpless (2 Chester, Pa., 246) .17 Crosby, Matter of (46 N. Y. St. Rep. 442)........17 Davison v. New Orleans (96 U. S. 97-106).17 Euston, Miatter of (113 N. Y. 174)............... 18 Eyre v. Jacobs (14 Gratt. 427). ................ 14 Herr, Matter of (55 Hun 167).17 Howe, Matter of (112 U. Y. 100)......18 Hoyt v. Commissioners (23 N. Y. 224)a.........15,21 Hulse, Matter of (39 N. Y. St. Rep. 402)..........18 Johnson, Matter of (49 IT. Y. St. R ep. W1) ..... 22 Keech, Matter of (32 N. Y. St. Rep.227)........ 28 Kirtland v. Hotchkiss (100 U. S. 491)............ 12 Leavitt, Matter of (4 N. Y. Supp. 179).......... 20 Lenox, Matter of (31 N. Y. St. Rep. 959)......27, 28 McCullough v Maryland (4 Wheat. 316)........... 12 McPhe.son, Matter rf (104 N. Y. 306) s......12f13, 26 Millers Est-, Matter of (110 N. Y. 216)....'7 22 Miller, Estate of (5 Denio 132)................. 26 Mixer, Matter of (10 Pa. Or. Ct. Rep. 409) ..... 18 Nash v. White's Bk. of Buffalo (105 N.Y. 243)... 24 Neale, Matter (-f Estate of (32 N. Y. St. Rep. 910 )27 Orcut t's Appeal (97 Pa. St. 179) 17 Peck, Matter of (30 N. Y. t. -ep.) 209) 19 People ex rel Society of N. Y. Hospital v. Purdy (58 Hun 386) .................... 28 Peters v. City of Lynchburg (76 Va. 927) 13 Prine, Matter of (136 N. Y. 347)............... 27 Prout, Matter of (136 N. Ye 347)............... 29 Pullen v. Com. of Wake Co. (5 Denio 292) 29 Robertson, Matter of (6 3 N. C. 361).......13, 14 Rogers, Mtter of (30 N. Y. St. Rep. 943)....... 18 Romaine, Matter of (127 N. Y.l) .. .. 27 Scholey v. Rew (23 Wall. 331) .............. 14 Schofield v. City of Lynchburg (78 Va. 367) ..... 13 Sherwell, Matter of (32 N. Y. St. Rep. 1020) ... 19 Small's Estate (151. Pa. St. l1) ............ 17 Smith, Matter of (5 Denio 90)...................18 Stewart's Estate, In re (131 N. Y. 274)...........22 Stroder v. C.ormnonwealth (52 Pa. ST. 181).........14 Swift Estate, Matter of (137 N. Y. 7).....18,17,22 Thorn v. Gardner (ll . Y.198)................. 19 Twigg's Estat--, In re (15 1. Y. Supp. 239) ..... 28 Tyson v. Maryland (28 Md. 597) ..... ....... 13 Vanderbilt's Estate (10 N. Y. 2upp. 23,9).28 Wallace v. Meyers (38 Fed. Fep. 184) Wolfls Estate (19 N. Y. St..Repo263).17,29 2 CHAPTER 1. Inheritance and Succession Tax may be' defined gener- ally to be a burden imposed on all property whether real or personal, passing to certain persons by will, by intestate law, or by deed or instrument intervivos, in- tendedto take effect at or after the death of the testa- tor. The eldest evidence we rtave of the existence of an inheritance tax id a papyrus which was found in Egypt and relates that one iermias was sentenced to pay a heavy penalty for failing to pay the tax upon succeeding to his fathre's house. Another papyrus, which might be construed as evidence of an attempt to avoid the payment of such a tax, records the sale of property by an old man to his sons for a nominal sum. The origin of Inheritance and succession taxes has usually been attributed to the Emperor Augustus, who is known to have established such a tax in the #ear 67_. D. which, in connection with the excise tax, was used to establish a permanent military. Exemptions from the tax were allowed for funeral ex- penses and when it was undaer a certain value or amount, most probably of 50 or 100 pieces of gold(wh~ich sum was only fixed by conjecture). Tne near relations on the fathee's side were also exempt but those on the mother's icde, called the Cognati, were not according to the law of the twelve tables, called to the succession. This Larsh institution was gradually undermined by humanity and finally abolished by Justinian. It is impossible to state the exact time that the Roman inheritance tax wias repealed but we have evidence of its existence as late as the reign of Gordian 111. and it had disappearea before the Code of Justinian, so it is probable that it was repealed either by Justinian or Diocletian. (Gibbon, Hist. ofDecline and Fall of the Ro- man Empire, Bk. V., Chap. VI.) When the Emperor Augustus submitted the plan of the inheritance tax to the Senate he said that he had found a draft of such a tax among the private papers of Julius Caesar and apparetntly it had been his intention to lay such a tax . As the Romans were well acquaintedwith the financial systems of Egypt about that time, it is safe to presume that they borrowed this system of taxation from the Egyptians. During the Miiddle Ages the only representation of 4 the inheritance tax that existed was the relief of h-eriot of feudal tenure together with some chargeS of a similar nature. There seems to be no historiaal connection traceable between these and the old inheritance tax whic., existed in Rome and her provinces. in many countries you can trace a direct historical connection between these and their present 3ystem of inh-eritance and suc- cession taxes. In England there seems to be no istor- ical connection between the relief and heriot of feudal tenure and either the present system of inheritrnce and succession taxes which exist in England or the old Roman inheritance taxes. England borrowed the idea of stamp taxes from Hol- land and the original Stamp Act of 1694 contained a pro- vision for a tax of five shillings on probates ana lettel of administration in the case of estates over 20 pounds. Four years later it was douhlea; and in 1779 it was grad- uated from 10 to 15 shillings according to the value of the estate. In 1780 Lord North introduced a tax on re- ceipts i'or legacies and distributive shares and which was afterwart increase i and s ometh~ing approximatimg a n ad- valowem scale introduced, ania discriminations were made in favor of the widow, children aria grana-chilaren. Th~e 5 tax was evaded by omitting to use receipts until 1796 when it was made a tax on the transfer itself and the t taking and giving of receipts s iaue compulsory and ex- ecutors and administrators,were uj.-iade personally liable for its payment. British legislation for two centuries has resulted in a complicated system of five distinct but alliea tax- es, known collectively as "Death duties" a name said to have been given them by Mr. Gladstone, ana separately as the probate, account, legacy, succession, and estate duties. (a) The "probate duty" is a name commonly applied to a stamp tax paid on the affidaavit required to be celivered before the issue of probate or letters of administra- tion.