74 Pa. Super. 361 | Pa. Super. Ct. | 1920
Opinion by
The testatrix by her will bequeathed pecuniary and specific legacies aggregating $121,006.70 and, by the tenth clause, devised and bequeathed “All the rest, residue and remainder” of her estate to the Fidelity Trust Co. et al., trustees for certain charitable uses. The net estate for distribution, after payment of debts and the collateral inheritance tax, which by the will was directed to be paid out of the residuary estate, amounted to $293,-526.95. The executors of the will had paid the Federal Estate tax, imposed by the Act of Congress approved September 8, 1916, 39 U. S. Statutes at Large, part 1, chap. 463, title II, section 201, page 777, as amended by the Act of March 3,1917, which amounted to $8,362.46. A question arose as to how the burden of this tax should be borne by, or distributed among, those who took under the will. The court below held that the specific and general pecuniary legacies were entitled to the benefit of the exemption of $50,000 from taxation, allowed by section
The specifications of error do not question the constitutionality of the act of Congress imposing the tax. It is upon all hands conceded that the levy and collection of some form of death duty is provided by the sections of the law in question. The public contribution which death duties exact is predicated on the passing of property as the result of death, as distinguished from taxes imposed on the property, as such, because of its ownership and possession. It is important to keep in mind that this is a tax imposed by the Congress of the United States. The power of Congress to impose such a tax and the nature of the impost, were so learnedly discussed,
The act of Congress with which we are now dealing provides: “That a tax equal to the following percentages of the value of the net estate, to be determined as provided in section 203, is hereby imposed upon the transfer of the net estate of every decedent dying after the passage of this act, whether a resident or nonresident of the United States: one per centum of the amount of such net estate not in excess of $50,000; two per centum of the amount by which such net estate exceeds $50,-000 and does not exceed $150,000; three per centum of the amount by which such net estate exceeds $150,000 and does not exceed $250,000; four per centum of the amount by which such net estate exceeds $250,000 and does not exceed $450,000”; and continues with increasing rates as the estate increases in value and finally imposes a tax of ten per cent upon the amount by which such net estate exceeds $5,000,000. Section 203 provides
What particular form of death duty does this statute impose? It is contended on behalf of the residuary legatees that the tax is placed on the passing of the legacies or distributive shares at a progressive rate, the amount of such rate being determined, not by the separate sum of each legacy or distributive share, but by the volume of the whole estate; that the total amount of the tax upon the entire estate of the decedent being ascertained, the burden must be borne by all the legatees, specific, general and residuary, in the proportion which the value of each legacy bears to the value of the whole estate. This would totally disregard the preference which a testator has given to one class of legatees over another, by bequeathing to one a specific legacy, to another a general pecuniary legacy and to a third the residue, or balance of his estate which remains after the satisfaction of other legatees. It must be kept in mind that the statute with which we are now dealing does not impose a tax at a uniform rate upon the whole net estate, making the rate at which the tax is to be levied dependent upon the value of the entire net estate. Thus, it does not say that when the value of the net estate is $100,000 it shall pay a tax at the rate of four per cent and when the value of the estate is $1,000,000 it shall pay a tax of ten per
We come now to the consideration of the appeal of the pecuniary legatees, whose contention is that the entire burden of the tax should be borne by the residuary legatees. If the tax imposed by the statute is on the interest of the testatrix which ceased by reason of her death, and not upon the particular legacies, then the contention of the pecuniary legatees must be sustained. On the very threshold the theory that the tax is on the particular legacies or distributive shares and not upon the interest of the testator, which ceased by death, is rebutted by the heading, which describes the tax, not as a tax upon legacies or distributive shares, but an “Estate Tax.” “This, whilst not conclusive, is proper to be con
The decree of the court below is reversed and the record is remitted with direction to make distribution in