Evening Star Newspaper, March 16, 1932, Page 5

STATES SET LIMITS ON ESTATE TAXES Keep Within U. S. Credits. A ) D. €. Proposal Would ' 5 Overstep Mark. (Continued Prom First Page.) passed by State legislatures in session during 1931. But it is significant to | note that both of these provisions, in- | cluded by many of the States as benefi- | cial to the decedent’s estate, have been | omitted from the new proposed District of Columbia estate tax bill, and are | noticeable for their absence. Allows 80 Per Cent Credit. The District of Columbia legislation lines up with the estate tax laws of | most of the States, in that it provides that the full 80 per cent credit allowed by the Federal Government must be forthcoming to be placed in the District | treasury. But prospects are, according to both the Bureau of Efficiency report, Jjust submitted to the Senate committee, and to other analyses made of the legislation, that estates in this city FEDERAL States and Territories. Indiana Towa . Kansas Kentucky Louisiana Maine ... Maryland . Massachusetts . Michigan ... Minnesota . Nebraska Nevada would have to pay much more taxes | Q] because certain restrictive measures which some other States have included in their laws are missing here. For instance, Alabama provides in its new legislation that the total State | tax is not to exceed in the aggregate | the Federal credit. Alabama’s legisla- | tion, approved last July and effective November 3, 1931, is written lmll com- paratively simple language, as follows: “There is hereby levied and imposed | upon the net estates passing by will, devise or under the estate laws of the State of Alabama, a tax of 80 per cen- tum of the tax imposed upon such net estates by the act of Congress approved Pebruary 3, 1926. The rates and the definitions of ‘net estates’ shall be as provided in said act of Congress.” ‘The m:lu of flumnlauarofldes against collecting for ‘more than 80 per cent of the Federal estate tax this clause in its State law: “8h the amount of tax in this act, increased by this section, be afterward found to be more than the maximum credit allowed under the Pederal estate tax act, then any excess over and above the said maximum credit shall be re- funded, as is provided in section 11 of this act.” States Set Limit of Tax. ‘The State of Michigan goes so far as to provide that no more than the 80 per cent shall be collected, and refunds are even to be made out of the “primary school funds.” This unusual provision reads as follows: “Upon the final Fed- eral determination of 80 per centum of the Federal estate tax the State treas- urer and auditor general shall refund and pay back to the executor, admin- istrator or zrl\:tee of such eetdale, m; other person interested thereunder, ouf nt“t:wflmry school fund all monies the fore pald to the appropriate county treasurer under this act in ex- cess of said 80 per centum which shall have been paid pursuant to said provi- the yment of an equal to the dmmnce between the total of such taxes hereinbefore im- , plus all other credits allowed by act for taxes paid the State governments, and 80 per centum of the tax which may be imposed by said Federal revenue act, and mandamus shall be available to such executor, ad- ministrator, trustee and other person to compel such refund and repayment.” Nebraska provides for State collection oderar'oe: b langusge which Toods 85 1 W) T as follows: L in no event shall the estate tax payable under the provisions of this act exceed the amount, if any, by which the maximum credit allowabl to the estate against the United States estate exceeds the credits herein provided for in section 1.” New Hampshire has another way of saying it: “Provided that such estate tax hereby shall in no case ex- ceed the extent to which its payment ‘will effect a saving or diminution in the amount of the United States estate tax payable by or out of the estate of the decedent had this act not been en- Virginia's State Tax. ‘The nearby State of Virginia, which has an inheritance tax, prohibits shall be always so construed as not to Increase the total amount of inheritance taxes, State and Federal, payable upon the estates of decedents, the only object take full ad- full advantage of such credit as the laws of the United States may allow.” Iowa says: “In no case shall a tax be collected hereunder which, altogether with the credits allowed by this para- graph, shall exceed the maximum credits allowed by said Federal estate tax act for any estate, inheritance, legacy or succession taxes actually paid to any State or Territory of the United States or the District of Columbia.” Montana restricts its State collections to 80 per cent of the Federal levy ““In no event shall the tax pay- under subdivision 4 of this section exceed the amount, if any, by which the maximum credit allowable to the estate against the United States estate tax exceeds the credits provided for in the preceding sentence of this section.” Certain other States have language somewhat similar, but the above are ical examples of how States arrange eir legislation to get the benefit of a State estate tax without adding any further burden on the estate than had this | Maine says: Oklahoma Oregon ..... Pennsylvania . Rhode Island. South Carolina South Dakota. Tennessee Texas Utah . Vermont Virginia Washington West Virginia. ‘Wisconsin ‘Wyoming 11,604,287 2,715,836 2,065,505 10,630,359 5,911,720 G STAR, WASHINGT! Proposed Estate Tax Exceeds States ESTATE TAXES—CREDITS ALLOWED FOR STATE INHERI- TANCE TAXES—JANUARY 1 TO DECEMBER 31, 1930. Total estate tax. ‘Tax credit. Per cent. 79.51 79.45 19.54 6951 | 80.00 1.76 5.98 79.38 | 42.80 764,712 154,994 156,504 847,680 402,051 13,695,328 38,379 49,016,791 14 792,535 80,974 13,675 370,577 600,382 15,828 Totals . ate District Committee, throughout the country. ‘The Federal tax. States. Proposed rates, percent. Proposed tax. $50.00 100.00 250.00 500.00 1,500.00 3,000.00 428/500.00 115 1,1785500.00 (depen allows a been deducted from the correspon Federal tax. The deduction for de * The net additional cost of the * Not subject to Federal estate tax. 152,391,240 $113,388,179 The figures shown were prepared by the Bureau of Efficiency for the Sen- . They show in the table above the general situation table indlontes the total Federal estate tax, the fotal credit allowed to the several States for payment of their own death taxes, and in the right column an interesting percentage, indicating the per cent of State death taxes allowed as credit against the Federal estate tax. five States charged their own estates as high as 80 per cent or more of the Eighty per cent is the maximum credit allowed. The small per cent of 1.76 credited to the District of Columbia indicates credit allowed to per- sons dying here who paid State death taxes on property they owned in other The average percentage of credit taken advantage of by the States is only 74.41, as compared to the maximum of 80. It will be noted that only COST OF PROPOSED ESTATE TAX LAW TO DECEDENT'S ESTATE, | DISTRICT OF COLUMBIA. Per Net cent of net additional additional cost of pro- _cost to posed law.* net estate. Reduction in Federal estate tax.” *) $50.4 100.00 250.00 500.00 1,340.00 2,280.00 2,820.00 282,460.00 393,850.00 34,660.00 1,070,640.00 107,860.00 * The net estate means gross estate, less deductions and exemptions, ascer- tainea@ according to the provisions of the District bill. * The estimated reduction in Federal estate tax is arrived at by computing | the credit of 80 per cent allowed under the internal revenue act of 1926 upon a similar gross estate and deductions (but not exemptions). permits exemptions for transferred property ranging on relationship of beneficiary), whereas the Federal Governmept it exemption of swo,onm’n every case, & differential of $80,000 has Since the District bill from $1,000 to $20,000 net estates in the computation for the deducting the amount of the credit whic! ment from the amount of the estate taxes under the proposed District law. lents’ estates in the District of Columbia is then ascertained by taking 80 per cent of the theoretical Federal tax. roposed District law is computed by will be given by the Federal Govern- estates under the Federal law. most of the States of the Union. ‘The figures in the table above show the various net estates, proposes to be imposed by the District bill and how much the Federal Goveyrnmentd;onlif; lose, while the District of Columbia gained in returns. the D. C. bill lays a tax on estates as low as $5,000, whereas the Federal Gov- ernment starts at $100,000. In the two columns to the right are seen the de- tails of how much more money would have to be pald out by estates passing at death here were the new bill passed, than now would be paid by these same | It will be noted that The combination of the two tables thus in- dicates that the new death tax proposed here is higher than that imposed by | The States generally charge less than 80 per cent of the Federal levy, this city would charge mare. would restrict collections here to 80 per cent of the Federal levy, but accord- ing to all analyses so far made, the local legislation would normally collect more than the 80 per cent credit, as is shown in the accompanying Bureau of Efficiency table. The rates in the District bill are substantially the same as those in the Federal law, which would make the local estate tax more than 80 per cent of the Federal tax. Many of the States include a pro- vision that should the Federal law be repealed, their own State statute should be repealed. ~Among the sections providing for this is that of Maine, one of the earliest States to get the benefit of the 80 per cent credit. “This act shall become void and of no effect in respect to the estate of who die subsequent to the effective date of the repeal of title 3 of said Pederal revenue act, or of the provision thereof providing for a credit of the taxes paid to the several States of the United States not exceeding 80 per cent of the tax imposed by said title 3.” Mississippi says: “The inheritance tax law of this State shall remain in full force and effect so long as the Government of the United States areldy been laid by the Federal estate | X. ‘The District of Columbia estate tax retains in full force and effect as a part of the revenue laws of the United | States a Federal estate tax, and this | YOUR JOB NEED NOT MAKE YOU FEEL Keep Clean Inside and You'll Look Well and Feel Well Doty lihave | thoselldays when nothing seems to go uite right . . . feel tired and listless? 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You'll agree 60LITTLE they are the nicest bowel and liver aid you ever | | bill not only omits a provision which |statute shall be repealed as and when the Government of the United States ceases to impose an estate tax of the United States.” Due to the fact that more States have been passing new laws to get the benefit of the 80 per cent Federal credit, the actual amounts of Federal estate taxes collected have been steadily decreasing nearly every year since 1924, when the first credit of only 25 per cent went into effect, according to reports by David Burnet, commis- sloner of internal revenue. was raised to 80 per cent in 1926. The five leading States in the col- lection of Federal estate taxes and the amount collected are: New York, $13,439.538.06 for the last fiscal year; Pennsylvania, $5,058,811.89; New Jersey, $3,205,198.58; California, $2,981,213.81, and Massachusetts, $2,531,189.22, Retroactive Features. One of the vital questions which still Temains in a somewhat indeterminate status is the so-called retroactive pro- vision, which some States have included in their estate tax laws. Several States have attempted to collect the full 80 per cent from all estates not fully dis- The credit | TAXES HEAVIEST IN OTHER NATIONS Increases by U. S. Will Leave | Rates Lower in Both High | and Low Brackets. | George Brown, storekeeper, and Bill | Smith, “white-collar” worker, may think H their Uncle Sam is hardboiled in plan- ning to levy next year an income tax paysnem which will surpess that called | for yesterday. - Yet they and their fellow taxpayers | in both low and high mcome brackets 4 | are scheduled under tne proposed in- | crease to get only a little slap on the wrist Cumpgarrd with the terrific wallops regularly dealth the tax-bowed toilers and landed gentry of Europe. In the United States a married man with one dependent child and & net in- come of $2,000 pays no Federal income tax now and would not pay any under | the provisions of the new revenue bill in Congress. A m‘urzn of Germany, with the same income and dependents, pays a tax of | $215; an Italian pays $218; & French- man, 104 and an Englishman $63. More Pronounced Levies. More pronounced is the severity of European levies on the middle and high income classes. For example, the Ger- man with a net income of $5,000 a year contributes $989 to his government in income tax alone. The loyal subject of King George digs up $717; the French- man, $104 and an Englishman $63. The married American with one child and an income of $5,000, under present regulations pays 16.50 Federal income tax. If the new revenue bill is enacted as drawn, he would pay $29.50. In 1924 an American of the same status paid $42.50. The residents of 28 of the 48 States are now required to pay a State income tax in addition to the Federal levy. The State taxes, however, average consider- ably lower than the Federal. Conse- quently, & person with a $5,000 income, living in a State which im an in- robably would'nt pay a total would be only one-four- Particularly heavy are British levies on high incomes. A married man with one child and an income of $10,000 in Great Britain pays $1,800. American Rate Lower. In the United States he now pays $123. He paid $204 in 1924 and would pay $154 in 1933 under the new reve- nue bill. The same man with an income of | $100,000 pays $48,000 in Great Britain and $16,245 in this country. In 1924 he | paid $$22,000 and under the new bill he would pay about $26,000. This measure grants an exemption of $1,000 to single men, $2,500 to married men and $400 for each dependent. Great Britain's exemptions are $485 for a single man; $730 for a married man, $245 for the first dependent child and $195 for each other child. For Americans who “view with alarm” the projected boost in income taxes, Government, financial experts cite the prospect of tax rate reductions and in- creased exemptions such as have been made heretofore when the Treasury en- joyed a surplus. | COURT ALLOWS PLAINTIFF TO TAKE WHISKY BRACER lAttomey Makes Request in Mar- riage Annulment Case Because of Low Blood Pressure of Client. By the Associated Press. LOS ANGELES, March 16—By spe- clal permission of the court a plaintift in a marriage annulment action was allowed to brace himself with a drink of whisky on the witness stand before he began his story yesterday. “I have an unusual request to make,” said Attorney S. S. Hahn as his client, Dr. Chester M. Sutton, rctired physi- clan, took the stand. “Dr. Sutton has a low blood count and is advised by his doctor to use whisky. Will your honor grant my client permission to take a swig before he starts his testi- mony?” Judge Joseph L. Call assented and Dr. Sutton upended a flask. He then declared Mrs. Rosa Sutton, 30 years his junior, had deceived him concerning her past. Judge Call took the case under ad- visement. CATTLE DEALER STABBED JACKSON, Tenn., March 16 (#).— Earl Webster, 24-year-old cattle dealer of Kimball, Nebr., was stabbed here yes- terday in what police said was an alter- cation with Edward Mullins, 30, of Henderson County. Webster, at first reported in a critical condition, was said at a hospital to be recovering from his wounds. Police Sergt. R. A. Maynard, who arrested Mullins, sald no other men were Involved in the controversy and that there was no basis for a 1eport that Webster was wounded in resisting a hold-up attempt. tributed and still in process of settle- ment where the date of death was sub- sequent to February 26, 1926, the date of enactment of the latest Federal es- tate tax credit provision. ‘This retroactive feature and other Phn.sc: of the proposed estate tax legislation will be discussed in subse- quent articles. Who to get to do it? SERVICE. essary, large. We Finance Just think. . firm. over a period of months. plan. 212%Ga. Ave. HOME OWNERS . . . this plan | has been arranged to assist you ‘Use Our Free Home Inspection Service in Planning Any Remodeling How much will it cost? These questions immediately arise when you con- sider remodeling or repairing your home. 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