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Tlio Tariff— Inheritance Tax. “ The Secretary of the T ’-easury is authorized and directed to submit to Congress rules and regulations for the collection of the same for further congressional action.” S P E E CH Mr. OWEN. Mr. President, the Finance Committee has struck out the inheritance-tax provision of the House of Representa tives. It should have been heavily increased and made pro gressive on the swollen fortunes of the country. The most OF O K L A H O M A , important need of the people of the United States of this genera tion requires the abatement of the gigantic fortunes being piled In t h e S e n a t e o f t h e U n i t e d S t a t e s , up by successful monopoly, by successful stock jobbing, by skill Tuesday, June 29, 1909. ful appropriation under the protection of the law of all the oppor The Senate, as in Committee of the Whole, having under consideration tunities of life, and which have brought about a grossly inequi the bill (H . R. 1438) to provide revenue, equalize duties, and encourage table distribution of the proceeds of human labor and of the the industries of the United States, and for other purposes— values created by the activities o f men. Mr. OWEN said: I have framed this provision for the express purpose of pro Mr. P r e s id e n t : I do not agree with the Senator from Mon posing a readjustment in the distribution of wealth in this coun tana TMr. D i x o n ] that the psychological moment is at hand try in a manner which will restore to the people who have for the adoption of the inheritance tax. I have not the slightest created these values the gigantic sums appropriated either byidea that there is any probability of the programme laid down fraud or by the permission and the assistance of the law itself. by the committee being changed in any respect. But I am in d is t r ib u t io n o f w e a l t h . thorough accord with the view o f the Senator from Montana Mr. President, I have heretofore shown to the Senate in a in regard to the wisdom and propriety of an inheritance tax. I favor, equally, the income tax. But I regard the inheritance manner most conclusive that the very great part of all of the tax as a matter of far greater importance, and that it ought wealth of this country has already passed into the hands of to be added to our permanent fiscal system, not only for the less than 10 per cent, and over half of the national wealth into purpose of raising revenue, but for the further and more im the hands of less than 1 per cent of the people. (P. 3403, Con portant purpose o f abating the increasing danger of the accu g r e s s i o n a l R ecor d , June 16.) Spahrs’s table for the distribution of wealth in the United mulation of fortunes swollen beyond all reason, which now con stitute a menace to the stability of our finance and of our States, taken from his work, “ The Present Distribution of commerce and to the liberties o f the people o f the United States Wealth in the United States,” when our national wealth was $6 0 ,0 0 0 ,0 0 0 ,0 0 0 , is as follows: and of the civilized world. I suggest to the Senate a progressive inheritance-tax amend Per Average Aggregate Per Class. Families. cent. wealth. ment, which I ask the Secretary to read. wealth. cent. The VICE-PRESIDENT. Without objection, the Secretary 1.0 $263,040 $32,880,000,000 125,000 54.8 will read the amendment proposed by the Senator from Okla 10.9 14,180 1.362.500 19,320,000,000 32.2 homa. 1,639 7,800,000,000 38.1 13.0 4.762.500 50.0 6,250,000 The Secretary read as follows: OF I I ON. E G B E R T L. 0 WEN, PRO G R ESSIVE IN H E R IT A N C E TAX A M E N D M E N T . Suggested to the Senate by Mr. O w e n . In lieu of sections 34 and 35. insert the follow ing: " A legacy duty shall be and Is hereby imposed upon the transfer of any right, title, and interest in or to any property, real or personal, by will, grunt, or transfer in any manner, or under the Intestate law of ai*y State or Territory, or of the United States, from any person In anticipation of death, or of any person dying, who is seized or possessed of such property while a resident of the United States, or of any of us possessions; or when the property of such decedent lies within the United States, or within any of its possessions, and the decedent or krantor was a nonresident of the United States, or of any of its possessions, at the time of his death, in accordance with the following sched ule. to w i t : “ Where the clear value of the entire estate is less than $100,000 it ■’hall be exempt from legacy duty, otherwise, subject to the following d»tles, to w i t : . ” Where the clear value of the entire estate is between $100,000 and *300,000, 1 per c e n t; between $300,000 and $500,000. 2 per c e n t: be tween $500,000 and $600,000, 3 per c e n t; between $600,000 and $700,mo, 4 per c e n t; between $700,000 and $ 1 ,000,000, 5 per c e n t; and every excess in the clear value of such estate over and above *1,0 0 0 ,0 0 0 there shall be automatically added in addition to 5 per a pd accumulative as to each additional increase, 1 per cent aadi nonal legacy duty to be laid upon each increase in the clear value of £8tate ° f $1,000,000. or the major fractional part thereof, until ■uch duty reaches 100 per cent cumulative duty upon such additional increase in the clear value of such estate. ‘Provided, That when such estate, by will, devise, grant, or inheritaoee iaw goes t0 c° b ateral kin, there shall be imposed the following additional legacy duty upon such portion only of such estate as may descend to such persons severally, to w i t : " Brothers and sisters, or their descendants, 3 per c e n t; uncles and aunts, or their descendants, 5 per c e n t; other persons, not children or parents, 10 per cent. “ Provided, That any property conveyed, in anticipation of death, by any person, as a gift or grant to the extent conveyed without adequate consideration, where such estate would come within the rule imposed by this act, fixing such legacy duties, such conveyance, gift, or transfer, however made, shall lie subject to the legacy duty herein provided, as if it were the estate of a decedent, and the estate shall be chargeable therewith unless otherwise paid. Where corporate stocks or bonds are transferred or placed under a trust for transfer within five rears pre vious to death, as a gift, either in whole or in part, to that extent such transfer shall be conclusive evidence of its character as a legacy. “ Provided, however, That property devised or bequeathed to any religious, educations, patriotic, charitable, or benevolent corporation or Institution shall ae exempt from legacy duty. “ The legacy duty hereby imposed shall be a Hen and charge upon the property of every person who may die as aforesaid, from the date of the death of such person, and shall be payable within one year, bearing 6 per cent from tae date of the death for the first twelve months, and thereafter at the '•ate of 10 per cent until fully paid. 088— 8491 Total-------- ------------- __ 13,500,000 100.0 4,800 60,000.000,000 100.0 The inequalities have been steadily growing worse, and when a single person’s fortune is estimated at a thousand millions and is gathering in $50,000,000 per annum of the net proceeds of the products of the labor of this country, while millions of human beings can not lay aside $50 apiece per annum, what must be the inevitable result? It is this condition, half under stood, that is developing rapidly a sentiment of radical social ism, discontent, and social unrest. Moody’s Manual of 1907. page 30, presents a “ General Sum m ary” of corporations offering stocks and bonds for sale to the stock exchanges and recorded by him in great detail in a volume of nearly 3.000 pages, as follows: Total stocks and bonds. Steam railroad division__________________________________ $15, 436, 758, 000 Public Utilities d iv ision __________________________________ 8 ,1 3 0 ,4 6 4 ,0 0 0 Industrial division____________________________________ Mining d iv isio n ___________________________________________ 1 0 ,1 5 6 ,3 3 3 ,0 0 0 2, 525, 173, 000 36, 248, 668, 000 In addition to this enormous volume of corporate wealth, which comprises a registered one-third of our national wealth, there is an unregistered volume of corporations which are close corporations which do not sell stock, which are personal cor porations, amounting to thousands of millions of dollars. I respectfully call your attention to the Statistical Abstract of 1907. Table 244, which sets forth the wealth of the United States, which shows clearly where its approximate ownership may be found, to w it: T a b le 2U, S ta tis tica l A b s tr a c t, 1907. Real property--------------------------------------------------------------------Live stock--------------------------------------------------------------------------Farm implements and machinery______________________ Manufacturing machinery, tools, etc__________________ Railroad equipment— -----------------------------------------------------Street railway, shipping, waterworks__________________ Agricultural products___________________________________ Manufactured products_________________________________ Imported merchandise___________________________________ Mining products______________________________________a _ _ Clothing and personal ornaments______________________ Furniture, carriages_____________________________________ Total for United States $62, 341, 492, 134 4, 073, 791, 736 844, 989. 863 3, 297, 754. 180 11, 244, 752, 000 4, 840, 546, 909 1, 899, 379, 652 7, 409, 291, 668 495, 543, 685 3 2 6 ,8 5 1 ,5 1 7 2, 000, 000. 000 5, 750, 000, 000 107, 104, 211, 917 CONGRESSIONAL RECORD 2 Where do the city laborers under protection come in as joint heirs of modern prosperity? What part of this wealth created by labor is theirs? They have no real estate, no live stock, farm machinery, manufacturing machinery, railroads, or under any visible classi fication. The only thing that they can have under this tabula tion is clothing and a little personal property. And yet the products of the labor in our specified manufactur ing industries of 1905 reached a total of $14,802,147,087, for 5,470,321 wage-earners, whose product was therefore worth $2,708 per capita. These people received $2,611,540,532 in wages (Stat. Abst. U. S., 1907, p. 144), or $479 per capita. This $479 each must feed and shelter and clothe and educate and provide leisure and the joyous participation in the common providences of God for an average of three people, or about $16<> each per annmn, or about an average of $13.33 per month. There can hardly be much margin of saving under the circum stances fo r sickness, ill health, accident, or loss of employment. In New York City, with over four millions of people, less than 1 in 40 has any real estate. we all agree is of the highest importance in developing human beings. T H E PLAN PRO PO SED IS L A W F U L . Mr. President, the plan proposed is lawful and has been passed upon by the Supreme Court of the United States in Magoun v. Illinois Trust and Saving Bank (107 U. S., 283), in which the court held that the inheritance-tax law of Illinois makes a classification for taxation which the legislature had power to make, and that the inlieritauce-tax law does not con flict in any way with the provisions of the Constitution of the United States. The court in this case shows that these laws have been in force in many of the States of the United States—Pennsyli vania, 1826; Maryland. 1844; Delaware, 1869; West Virginia, 1887; Connecticut. New Jersey, Ohio. Maine, Massachusetts, 1891 ; Minnesota, by constitutional provision. The constitutionality of said taxes has been declared and the i principles explained in many cases referred to in the case above j mentioned. For example, in the United States v. Perkins (163 j U. S., 625), Klapp v. Mason (94 U. S., 589), United States r. Fox (94 U. S., 315), Mager v. Grima (8 Howard, 490), and so EN ORM OUS W E A L T H IN H E R IT E D BY A M AN’ S C H IL D R E N IS W O R T H L E S S IN I forth. T H E H IG H E S T AND BEST SEN SE. With the consent of the Senate, I submit a record of the inMr. President, it takes a human being of the first magnitude ; beritance tax of the British Empire, the German Empire, and of to administer an estate of $10,000,000 with wisdom and effi the German Independent States: and, without objection, I will ciency. No human being can protierly consume the income of print in the R ecord these tables without reading them. such an estate, which, at 5 per cent, will make an income of T H E PR A C T IC E S U ST A IN E D BY FOREIGN CO U N T R IE S. $500,000 per annum, $1,366 per diem—about a hundred dollars D. Max W est, in his work on Inheritance Tax, fully sets forth the practice of every nation in this regard. I freelv quote from his work an hour for every waking hour. Since such vast sums of money can not be properly used by and call attention of the country to it. England has adopted the progressive inheritance tax. reaching as far the individual in the gratification of any just personal needs, and as 15 per cent on great estates. Inheritance tax of the British Em pire: since its possession frequently leads to the wildest extrava In the finance act of 1804 (57 and 58 Viet., chap. 30 ) Sir Vernon gances, to the establishment of false standards of life, and often Ilarcourt simplified the system of death duties, removed the more glar leads to harmful dissipation and vice, and sometimes even to ing anomalies, and greatly extended the application of the progressive the corruption of our legislatures, of our administrative offices, principle. For the old probate, account, and estate duties he substi tuted a new estate duty graduated according to the size of the estate, and of the judiciary itself in the crafty ways by which we all real and personal, from 1 to 8 per cent, as follows : know human beings can be misled, a wise public policy should When the principal value of the estate— Exceeds £100 and does not exceed £300. 30 shillings. establish a system of government which will restore to the Exceeds £300 and does not exceed £500, 50 shillings. people so much of the swollen fortunes developed by our mod Exceeds £ 500 and does not exceed £ 1 .000. 2 per cent. ern methods as justice demands. Exceeds £ 1,000 and does not exceed £10,000. 3 per cent. Exceeds £10,0 0 0 and does not exceed £ 2 5,000, 4 per cent. No thoughtful student will deny that these gigantic fortunes Exceeds £25,000 and does not exceed £50,000, 4 A per cent. represent values created by the labors and the activities of our Exceeds £ 50,000 and does not exceed £75.000, 5 per cent. people. No man can deny the moral righteousness of restoring Exceeds £ 75,000 and does not exceed £100.0 0 0 , 5 a per cent. Exceeds £ 1 0 0.000 and does not exceed £ 150.000, 6 per cent. to the people by legacy duty that which they have created and Exceeds £1 5 0 ,0 0 0 and does not exceed £250.000, 6J per cent. which has been taken from them under legal processes and by Exceeds £250,000 and does not exceed £500,000. 7 per cent. fair legal means, in the best view of the case, and by crafty, Exceeds £ 5 0 0.000 and does not exceed £1,000 ,0 0 0 , i j per cent. Exceeds £ 1 ,0 0 0,000, 8 per cent. unfair, and illegal means, in the worst view of the case. THE TAX M O RA LLY AND E T H IC A L L Y J U S T . It will do no harm to the legatees o f these swollen fortunes to contribute to the State a reasonable percentage o f such fortunes. They receive these fortunes as a gift, without effort, without service, and are purely beneficiaries of a public legal gratuity, which permits them to receive, without consideration, vast sums by authority of a public statute. It is true. Mr. President, that the usual inheritance statute itself, based upon the obligation of the parent to provide for his child, is thereby justified ; that the child, the wife, the dependents have moral claim for support out of the proceeds of the labor, self-sacrifice, ambition, or providence o f the parent; but these considerations are abundantly recognized and provided for in the amendment which I have the honor to submit. They are more than provided fo r; they are left rich beyond every possible desire or need of a well-ordered mind or a well-disposed heart, We all agree that it would be unwise to remove or weaken the incentive of an abundant reward as a compensation for the great personal virtues of industry, providence, enterprise, selfsacrifice, and labor, and the proposed legacy duty will not remove a reasonable incentive, while it will put, perhaps, a check » v h u i u r s i i t t i r i e d ambition not content with tens of muttons, but greedily disposed to acquire hundreds of millions at the expense of a just distribution o f wealth. Common sense and sound public policy demand that a fair incentive be not taken away from the humbler citizens, who now. in vast numbers, have not a sufficient supply of this world's goods to protect themselves against an illness of thirty days, and from ivhom every incentive of hope is removed except the pittance of a meager daily bread. While we should be considerate of the incentive to labor, in dustry. providence, and self-sacrifice, on the part of strong and powerful men, we should see to it that this incentive is not taken away from millions of weaker men, or permit one man, with the advantage of the accumulated millions drawn from his ancestors, UNDER THE AUTHORITY AND PERMISSION OF OUR LAWS, to appropriate all of the opportunities o f life, and thus deprive millions o f feebler men of the incentive which 9S8—8491 By the finance act of 1007 the estate duty on estates exceeding £150,0 0 0 was increased to the following scale: When the principal value of the estate— Exceeds £150,000 and does not exceed £250,000. 7 percent. Exceeds £25 0 ,0 0 0 and does not exceed £ 500,000. 8 percent. Exceeds £ 5 0 0,000 and does not exceed £750,000. !> percent. Exceeds £ 7 5 0,000 and does not exceed £ 1 .000.000. 10 per cent. Exceeds £ 1 ,0 00,000 and does not exceed £1,500 ,0 0 0 , 10 per cent on the first £1,000,000. 11 per cent on the remainder. Exceeds £1.500.000 nnd does not exceed £2,000,000, 10 per cent on the first £1,000.000, 12 per cent on the remainder. Exceeds £2.000.000 and does not exceed £ 2 .500.000, 10 per cent on the first £1,000.000. 13 per cent on the remainder. Exceeds £2,5 0 0 ,0 0 0 and does not exceed £3.000.000, 10 per cent on the first £ 1 .000.000, 14 per cent on the remainder. Exceeds £3,000,000, 15 per cent on the remainder. In addition to this estate duty, calculated on the value of the estate as a whole, collateral heirs still have to pay legacy duty on their j legacies or distributive shares of personal property, and succession duty on the corresponding shares of real estate and on leaseholds, settled personalty, and legacies charged on land, which are not subject to j legacy duty, according to the following consanguinity s c a le : Per cent. 3 Brothers and sisters and their descendants-------------------------------------------j Uncles nnd aunts and their descendants------------------------------------------------5 Great uncles and great aunts and their descendants---------------------------0 i ' Other persons------------------------------------------------------------------------------------------------ 10 a xim iiai sp stem , im p o sin g th e fo tio icln g till i T h e H erm an E m p ire h m p eria i in h erita n ce ta x. ; Per cent. I Parents, brothers, and sisters, and their children---------------------------------4 |Grandparents and more distant ancestors, parents in-law and step parents, children in law and stepchildren, grandnephews and j grandnieces, illegitimate children acknowledged by the fathers i and their offspring, adopted children and their offspring--------------6 Brothers and sisters of parents and relatives by marriage in the second degree In collateral lines----------------------------------------------------------8 In other cases-----------------------------------------------------------------------------------------------1° The tax is progressive, the rates given above being Increased in the case of inheritance over 2 0,000 marks by one tenth : for each further sum. at first of 20 ,0 0 0 or 2 5.000 marks and afterwards of 50,000 or 100,000 marks For amounts over 1,000,00*) marks the tax is levied at two and one-half times the basic rates, making the maximum rate 25 per cent. In the case of the immediate relatives, subject to the 4 per cent rate, the progression applies only when the value of the inheritance is more than 5 0,000 marks. On large amounts the German tax is considerably heavier than the French, because the progressive rates apply to the entire amount o f the inheritance, not merely to their respective frac tions ; but when an inheritance is valued at a sum slightly in excess CONGRESSIONAL RECORD of that to which a lower rate applies, the higher rate will be collected only in so far as it can be paid out of half the amount by which the inheritance exceeds the preceding class limit. 3 Besides this, the German independent States also have a progressive inheritance tax, according to degree of consanguinity, as well as a pro gressive rate. Rates of German inheritance taxes in force January i , 19C6. AlsaceAnhalt. Lorraine. Children____ _____________ _____ Other descendants... Adopted children___ _____ ____ Stepchildren_________________ _____ ____ Parents......... ................... .. Grandparents, etc_____ ____ Stepparents.._____________ . . . . Ohildren-in-1 aw .............................. ................... Brothers and sisters____ ____ ____________ _______ Nephews and nieces_________ Uncles and aunts.................. . . . . ____ . . Grandnephews, grandnieces_________ . .. . Greatuneles, greataunts.............................. Cousins-german_________ _____ _____ Great-grandnephews and nieces............. ....... Great-greatuneles and aunts............ Relatives of the sixth degree___________ More distant relatives and strangers... a. Husband or w ife............... ......... Children............... ................ ........ Other descendants_____________ Adopted children....... .................. Stepchildren......... ..................... . Parents_______________________ Gr and p arents ,eto_____________ Stepparents_________ _______ Chfldren-in-Iaw___________ ____ Brothers and sisters................... Nephews and nieces____________ Uncles and aunts......................... Grandnephews, grandnieces___ Greatuneles, greataunts______ Cousins-german_______________ Great-grandnephews and nieces. Great-great uncles and aunts___ Relatives o f the sixth degree... More distant relatives and strangers___________________ Baden. Bavaria. Bremen. Bruns wick. Ham burg. Hesse. Lippe. Lubeek. MecklenburgSchwerin. Olden burg. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. 4 _______ »2- 3 1 2- 3 2- 4 2- 4 1 2- 3 4- 8 4- 8 4 2i 1 1 4- 6 <*5- 7} 6-12 3 6-12 ( e) 2 4 24 5- 7j 6-12 4 3 6- 9 4- 8 6 8 9 1 1 f5 «4 5- 7* 6-12 6-12 1 e6 5- 74 6-12 1- 2 6-12 9 24 4 6 4 8 6 6-12 6- 9 4 57J 4 6-12 3 6 24 3 9 6- 9 4- 8 8 4 24 i 4 5- 74 4- 6 6-12 6.5 3- 4 3 6 -1 2 <*5 4 2 5- 7J 6.3 4- 6 3- 4 6 8-16 8-16 5 3 24 7 3 10-15 6.5 6- 9 6 6 5 8-16 8-16 8 6 7 3 4- 6 3- 4 6 10-15 7 10-20 6 10-20 8 24 7 6 8-12 6 10-15 5 7 6 10-20 10-20 10 6 7 5 3 6 10-15 8-12 6 10-20 7 10-20 10 6 7 6 3- 4 10-15 10-20 10-15 8 8 10-20 10 6 24 7 6 10-15 5 10-15 10 8 10-20 8 10-20 10 6 10 6 10-15 5 10-15 8 10-20 10 8 10-20 10 10 10 8 8 10-15 5 10 15 10 10-20 9 10-20 10 10 Reuss (elder line). Reuss (younger line). SaxeAltenburg. SaxeGotha. SaxeCoburg. SaxeMeiningen. SaxeSaxony. Weimar. SchwarzSchaum- SchwarzWurtburg burg-RuburgSonders- temberg. Lippe. dolstadt. hausen. nt. Per cent. Percent. Percent. Per cent. Per cent. Per cen t . Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. b3 2 4 ............. 3' 6 2 4 2 4 4 2 4 4 6 « 8 3 6 6 6 6 6 6 6 8 8 4 4 2 4 -6 8-12 2- 3 3-4J I 8-12 I 8-12 4 -6 6 -9 8-12 8-12 j 8-12 8-12 8-12 8-12 8-12 10-15 a Only 1 per cent of offspring also inherit. 6 Exempt if with issue. r N ot exempt if children are excluded. J Unless children are excluded. 6 6 5 6 6 6 6 6 8 8 8 5 8 92 02 8 8 5 6 8 8 8 8 10 10 10 6' 6 4 4 6 4 6 6 4 9 9 6 6 4 4 6 4 6 6 4 6 6 8 10 9 8 6 6 5 6 4 6 6 4 4 5 4 5 5 4 5 5 *6 (D 6 . 2 8 2 4 6 3 ................. 4 4 5 5 3 3 0 3 4 3 2 8 6 8 8 8 4 4 4 4 4 4 4 4 4 4 4 ................. 8 8 2 4 8 8 8 8 8 8 8 8 8 5 8 8 6 6 8 8 8 8 8 8 8 8 3 2 3 4 4 5 5 4 5 5 5 3 4 4 c Exempt on 1,000 M. and on 20 per cent of the excess. f Exempt on the interstate portion. » Exempt on the compulsory share (one-half the interstate portion). * Relatives, 6 per cent on the interstate portion. Progressive rates are a recent development in Germany. Schaumbergheritances of more than 50,000 marks being subjected to additions of Elppe had a slightly progressive collateral-inheritance tax as early as 5 or 10 per cent for each 50,000 or 100.000 marks, up to a maximum of 1811, but the maximum rate was only 3 per cent, and the progressive ! one and one-half or two times the basic rate. feature was omitted from the law of 1880. The recent progressive In most of the States gifts intei; vivos were taxed like inheritances, movement began in a small way in Baden in 1899, grandparents being but in some cases they were taxable only when made in contemplation taxed 2 per cent Instead of 1 when the amount exceeded 5,000 marks, of death or when formally authenticated. and certain collateral relatives 4 per cent instead of 3 on amounts Bavaria has the beginning of a tax on corporations as a substitute over 3,000 marks. More complete applications of the progressive prin for the inheritance t a x : the real estate of juristic persons, except ciple were made by Hamburg and Lubeek in 1903, by Bremen in 1904, : charitable and religious institutions, is subject to a tax of 1 per cent and by Anhalt and Reuss (younger line) in 1905, the rate on all in I once in twenty years. F ra n ce in lik e m a n n er has a p r o g r e s s iv e in h e r ita n c e ta x , ch a w iin g i« a cco r d a n ce w ith th e d e g re e o f c o n sa n g u in ity , as sh o w n by th e fo llo w in g ta b le : 1 to 2,000 francs. Direct line............................................................................... ........................................... Husband or w ife.............................................................................................................. I Brothers and sisters......................................................................................................... Uncles and aunts, nephews and nieces......................................................................... Great-uncles and great-aunts, grandnephews and grandnieces, cousins-german.. Relatives o f the fifth and sixth degrees...................................................................... Relatives beyond the sixth degree and strangers in blood...........„ ..........................j 2,001 to 10,000 franes. 10,001 to 50,001 to 100,001 to 250,001 to 500,001 to 500,000 1,000,000 250,000 50,000 100,000 francs. francs. francs. francs. francs. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. Per cent. 1.00 2.00 2.50 • 1.25 1.50 1.75 2.50 3.75 4.00 4.50 5.50 6.00 5.00 6.50 10.50 9.00 9.50 10.00 11.00 11.50 8.50 12.00 12.50 11.00 13.00 11.50 10.00 10.50 14.00 14.50 15.00 13.00 13.50 12.50 12.00 16.00 16.50 17.00 14.00 14.50 15.00 15.50 17.00 17.50 18.00 15.50 16.00 16.50 .15.00 Over 1,000,000 franes. Per cent. 2.50 7.00 12.00 13.50 15.50 17.50 18.50 1,000,001 to 2,000,001 to 5,000,001 to 10.000,001 to Over 2,000,000 5,000,000 10,000,000 50,000,000 50,000,000 francs. francs. francs. francs. trancs. Direct line................................................................................................................................... Husband or wife_______________ _____________________________ ________________ ___ Brothers and sisters.....................’ ........................................................................................ Uncles and aunts, nephews and nieces____________________ _____________________ Great-uncles and great-aunts, grandnephews and grandnieces, cousins-german. Relatives of the fifth and sixth degrees------------------------------------- ---------------- --------Relatives beyond the sixth degree and strangers in biood______________________ 988— 8491 Per cent. 3.00 7.00 12.00 13.50 15.50 17.50 18.50 Per cent. 3.50 7.50 12.50 14.00 16.00 18.00 19.00 Per cent. 4.00 8.00 13.00 14.50 16..50 18.50 19.50 Per cent. 4.50 8.50 13.50 15.00 17.00 19.00 20.00 Per cent. 5.00 9.00 14.00 15.50 17.50 19.50 20.50 CONGRESSIONAL RECORD 4 Switzerland in like manner has the progressive inheritance tax, a full account of which will be found on page 41, West, Inheritance Tax. In the Netherlands; Austria-Hungary; Italy; Russia; the Scandinavian countries, Norway, Sweden, and Denmark; Bel gium ; Spain; Portugal; Greece; Roumania; Bulgaria ; and in Spanish America, Uruguay, Chile, Brazil, Argentina, Guatemala, and Mexico, and Japan this system prevails. In Australasia they have heavy, progressive taxes imposed, not for the financial consideration alone, but also for the purpose of breaking up large estates, rising to 10 per cent in Victoria, New South Wales, South Australia, and western Australia; 13 per cent in New Zealand; and to 20 per cent in Queensland. Mr. President, some time ago I called the attention o f the Senate to the fact that the mortality tables of Australia, and particularly of New Zealand, show that they do not have much more than half the death rate we have in this country; and it is directly due to the more equal distribution of wealth and the better opportunity of life afforded to the man who toils. Sir Charles Dilke, in Problems of Greater Britain, part 6, chapter 1, declares that the institution of private property has not been weakened nor capital driven from the colonies by these progressive taxes. The Cape of Good Hope, Cape Colony, has like duties. Seven of the principal colonies o f Canada have succession duties with elaborate progressive scales: Ontario. Quebec. Nova Scotia, New Brunswick, Manitoba, Prince Edward Island, and British Columbia. NEED OP FEDERAL LAW TO PREVENT EVA SIO N . I call the attention of the Senate to this important fact in considering this matter, that whenever a fortune grows very large the owner o f that fortune can easily transfer his residence from a State which has an inheritance-tax law to a State which has no inheritance-tax law, and in that manner evade it For that reason it is of the highest importance that the Federal Government should lay its hand upon the inheritance tax and upon the gigantic fortunes which are built up under our system of laws permitting monopoly to grow and flourish in this coun try, so that, at the death of the ambitious individual who has profited by our system, the people of the United States may have restored to them that which has been created by their labor. Mr. President, I have no idea whatever that the amendment which I have the honor to propose will receive respectful con sideration n ow ; I do not offer it with any such view. I offer it because I desire the people of the United States to consider it, not because I expect the Finance Committee to consider it. This provision, if adopted by the people of the United States, will provide an enormous amount—not tens of millions, but hundreds of millions—that ought to go back to the people of the United States: and with that fund we could then have available a supply sufficient to improve the roads of the United States from the Atlantic to the Pacific, to improve the waterways of the United States and make transportation cheap, so that the tremendous outflow of the wealth of the people of the United States and their products might find an easy pathway to the sea and to the commerce of the world. IN H E R IT A N C E T A X IN T H E UN ITE D ST A T E S. When this policy shall have been adopted by the people of the The inheritance tax has been recognized in the United States by the act o f July 6, 1797; by the war-revenue act o f July 1, United States, it will check the very dangerous accumulations of gigantic fortunes which now comprise a serious menace to 1862; by the act of June 30, 1864; by the act o f April, 1898. the people of the United States. Where a single fortune reaches This law was repealed April 12, 1902 ( 32 U. S. Stats., 92). The receipts from the inheritance tax of 1898 are shown in a thousand millions and an annual income of fifty millions, increasing, as it must, in compounding geometric” ratio and the following table:_________________ being typical, it is obvious that such an unequal distribution of Percentage the proceeds of human labor is not only unjust, unwise, but is Fiscal year. Receipts. of internal dangerous to the peace and stability of the world. revenue. Fifty millions o f annual accumulations in one hand means the deprivation of many millions of people of a part of their 1808-90____________ $1,235,435.25 0.452 slender earnings, and the accumulated force of all the demands 1899-1000__________ 2,884,491.55 .977 1000-1901______________ . 5,211,898.88 1.690 o f all o f the great fortunes of the country, with their total 4,842,966.52 1.781 exactions, means the impoverishment of the weaker elements of 1902-3. ___________ 5,356,774.00 2.322 society by artificial exactions, depriving them of their reason 1903-4____________________ 2,072,132.12 able opportunity to the enjoyment o f life, of liberty, o f the pur 1904-5_______ 774,354.59 1905-8__________ ___ 142,148.22 suit of happiness, and of the enjoyment of the fruits of their own industry. A m erica n in h e r ita n c e -ta x la ics, b y S t a t e s . Monopoly and plutocracy have more power in this Republic than they have in the kingdoms of Europe, where duties on in Direct. Collateral. heritances universally prevail. State. Exemption. ! Rates. Exemption. Rates. If the managers of this bill strike out the inheritance tax on any pretense whatever, I shall certainly regard it as a tem Per cent. Per cent. porary triumph o f selfishness over the influence of patriotism Arkansas_______ 5 It will be impossible to prevent for a great “ $1,000 and righteousness. California___ 11-15 $500-$2,000 1-9 C o lorado___ 10,000 while the imposition of inheritance taxes. 3-6 2 500 First, because it is Connecticut10,000 3 10,000 1-2 right; second, because the judgment and the conscience of the Delaware *_ 5 501 Idaho ____ 4,000 American people, with their increasing intelligence, will not 500-2,000 U-15 1-3 Illinois____ 20,000 sustain the party now in power in such a gross lack o f its 2-6 500-2,000 1 Iowa , _ 5 1,000 obvious duty—a duty earnestly recommended by the President Kentucky „ 5 500 Louisiana « _ 10,000 o f the United States in his message of December 3, 1906, and 5 2 M aine___ 4 500 approved by such men as the noble-hearted Andrew Carnegie, Maryland-, 2J 500 who, in 1889, wisely said: Massachusetts 1,000 10.000 3-5 1-2 Michigan_____ Minnesota. Missouri_____ Montana Nebraska___ New Hampshire______ New Jersey___ New Y o r k ___ North Carolina.......... North Dakota.. O h io ___ _________ Oragcn____________ ____________ Pennsylvania_____ South D a k o t a ...____ Tennessee___________ _ Texas _____________________ U ta h ......................... .................... Vermont______ _________ Virginia________________ _ Washington________________ West Virginia_____ __________ Wisconsin____ ______________ Wyoming ________________ 5 11-5 5 5 2-6 5 5 5 11-15 2 5 2-6 5 2-10 5 2-12 5 5 5 3-12 3-71 11-15 5 100 10,000 *1 •2,000 10,000 500 500-2,000 * 1 1 7,500 10,000 1 3-4 10,000 2,000 1 • 5,000 1 5,000 By taxing estates heavily at death the state marks its condemnation of the selfish millionaire's unworthy life. It is desirable that nations should go much further in this direction. Indeed, it is difficult to set bounds to the share of a rich man’s estate which should go at his death to the public through the agency, of the state. He also said: 500 .500 2,000 25,000 200 500-2,009 250 100-500250 500-2,000 10^000 There are exceptions to all rules, but not more exceptions, we think, to this rule than to rules generally, that the “ almighty dollar ” be queathed to children is an “ almighty curse.” No man has a right to handicap his son with such a burden as great wealth. He also said : 5 10,000 i i 10 000 20,000 “ 2.000 t 10,000 This policy would work powerfully to induce the rich man to attend to the administration o f wealth during his life, which is the end that society should always have in view, as being by far the most fruitful for the people. Nor need it be feared that this policy would sap the root of enterprise and render men less anxious to accumulate, for, to the class whose ambition it is to leave great fortunes and be talked about after their death, it will attract even more attention, and, in deed, be a somewhat nobler ambition, to have enormous sums paid over to the state from their fortunes. “ Widows and (except in W isconsin) minor children taxable only on the excess above $10,000 received by each. » Tax payable only by strangers in blood. e Tax not payable when the property bore its just proportion of taxes prior to the owner’s death. * Applies to personal property only. * Decedents’ estates of less than $10,000 are also exempt. t For the surviving husband or wife and children, if residents of Wyo ming. $25,000. Mr. President, I sincerely hope that the managers o f this bill will do themselves the credit, and the Republican party the honor, to put into this bill a substantial progressive inheritance tax, even if they do not approve the form of the amendment I have the honor to proixise. Mr. President, I submit a table of the proceeds of the inherit ance taxes in the United States, and also in the several States. 988— 8491 .......... 100-500 500 1-3 2 I CONGRESS] ON A L RECORD PROCEEDS OF IN H E R IT A N C E T A X E S IN T H E UN ITE D STATES. The inheritance taxes paid in the various States now amount to about $10,000,000 a ' year. Below are shown the receipts from this | source for four years p a s t: Proceeds of the national tax on legacies and distributive shares of per sonal property, etc.— Continued. Proceeds of state inheritance taxes. 1902-1906, in comparison with the estimated true value of taxable wealth in each State, 190Jf. Value of personal property, 1900° (mil lions) . State. [In most cases the receipts reported are net receipts exclusive of com missions, etc.] Taxable wealth, Ham (mil lions) . State. T niol Qno INGW Till Hipoim u ----------- - Pennsylvania........................ Utah ~~................................. $781 3,881 1,101 1.317 221 8,034 3.943 980 749 1,417 4,533 3,149 3,229 3,598 036 1 ,949 493 3,022 13.440 812 5,693 766 10,814 629 1,058 407 342 1,235 986 814 2,734 256 Inheritance-tax receipts. 1902-3. 1903-4. $66 $1,605 “ 285,868 * 5,960 249,710 1,618 * 460,857 * 117,333 31,227 67,115 7)06,147 “ 163,572 3,422 142,564 * 8,506 * 2,804 138,932 4,665,736 39,276 1,300,835 <■66,007 44,144 29,440 19,612 8,292 1,367 1904-5. ° 286,561 <>5,961 265,781 3,272 b 460,858 * 141,721 10,694 73.899 91,559 562,193 * 181,539 $755 “ 532,713 <> 48,646 284,117 3,102 * 688,312 * 141,722 67,001 69,076 76,665 694,181 187,036 122,030 * 8,506 * 2,805 306,551 * 6,038 * 2,120 438,035 5,428,052 16,000 78,209 6,826 1,080,578 202,668 4,627,051 5,324 406; 744 23,192 1,677,185 * 56,007 39,393 37,227 12,797 25,774 6,443 4,320 * 34,310 9,971 41,058 20,215 * 33,267 10,495 125,965 * 4,373 1905-6. $850 * 48,647 274,259 * 688,312 190,748 86,655 70,534 107,820 712,720 289.025 159,455 213,131 *6,038 * 2,120 200,780 4,713,311 4,673 124,457 15,290 1,507,962 1,450 * 34,310 39,889 40,581 28,742 * 33,268 26,052 103,917 *4,373 ° Refunds deducted. 6 One-half the receipts for two years. c The figures here given represent the States share o n ly ; that is. in the case of Montana, three-fifths of the total receipts ; and in the case of Ohio, three-fourths of the net receipts. The following table shows the receipts from the national tax on lega cies and distributive shares of personal property during the two fiscal years when it was most fully in operation, In comparison with the estimated value of all personal property in each State or collection d istric t: P ro ceed s o f th e n a tion a l ta x on leg a cies and d is trib u tiv e sh a res o f p e r sonal p r o p e r ty , 1900-1902, in com p a rison w ith th e es tim a ted tr u e va lu e o f p ers o n a l p r o p e r ty , 1900. State. Alabama....................................................... Arkansas______________________________ California and Nevada.—............................ Colorado and Wyoming............................... Connecticut and Rhode Island.................. F l o r id a __________________________________________ Georgia......................................................... Hawaii......................................................... . Illinois_________________________________ Indiana...................... ........... ........... ........... Iowa................................................................ . Kansas, Oklahoma, and Indian Territory Kentucky........................................................... " Including stocks and b 988— 8491 Value of personal property, 1910° (mil lions). $401 296 1,235 596 704 168 453 Legacy-tax receipts. 1900-1901. $1,353.10 88,518.41 2.081.26 358,954.73 282.27 3,144.68 5,303.76 2,711 345,636.55 9,35). 47 1,106 1,316 19,533.59 1,278 6.964.17 569 12.934.06 nds of railroads, etc. 1901-2. $5,935.90 2,062.21 61,497.39 7,748.33 641,096.10 24,812.96 1,051.56 325,964.84 19,194.24 44,274.50 107.20 13,350.17 5 Louisiana and Mississippi._ Maryland, Delaware, and District of Columbia........................... .......... Massachusetts. _ Michigan.................. ................... . Minnesota------ --------------Missouri___ _ __ _ Montana, Idaho, and Utali _ Nebraska_______ . New Hampshire, Maine, and Verm ont... New Jersey........... ........... . New Mexico and Arizona.. New York................ .. __ North Carolina.. . ___ North and South Dakota____ Ohio.................................... .............. Oregon and Washington.. _ Pennsylvania........... South Carolina........... .......... Tennessee.................................. Virginia __-----------------------West Virginia............................ Wisconsin_________________ T o t a l.._______ ________ Legacy-tax receipts. 1900-1901. 1901-2. $703 $20,186.62 $20,076.69 759 1,442 1,035 1,056 1,243 665 751 652 1,107 251 4,533 343 500 2,100 602 3,917 247 445 1,013 508 326 943 <>217,581.10 452,944.61 66,498.47 17,931.27 78,078.32 2,813.40 1,732.90 67,813.64 295,935.17 455.71 2,314,425.51 2,577.13 («) 175,067.92 x141.21 571,019.10 2,780.25 6,395.58 18,264.77 8,373.08 2,865.09 33,890.78 *99,417.05 559,296.97 67,780.66 23,147.10 91,011.72 162,744.19 10,547.10 114,115.15 79,861.37 660.55 1,608,843.83 3,215.10 83.93 69,321.70 <<6,641.72 660,753.94 6,793.95 7,383.18 18,643.32 15,791.19 10,564.64 62,176.07 35,980 5,211,898.68 4,842,966.52 • Including stocks and bonds of railroads, etc. 6 Including Accomac and Northampton counties, Va. c Included with Nebraska. <* Including Alaska. Mr. President, these tables show what a small inheritance tax will do, and I call attention to the fact that the state taxes on inheritances are very small and the tax runs to small estates, which I do not think at all desirable as far as a federal inherit ance tax is concerned. The federal tax— inheritance tax—in my judgment, should be confined to large estates and should be made progressive, so as to abolish the present skillful evasion of the constitutional law laid down by our ancestors against the rule of primogeniture and entail. E N T A IL AND PRIM O G E N IT U R E . Mr. President, it is contrary to the welfare of the human race to permit estates in perpetuity, and it is against the spirit of the common law and it is against the constitutional rule everywhere in force in our Republic forbidding primogeniture and entail. The rule of primogeniture is so well understood that no man would be so imprudent as to attempt to leave his estate subject to such a will. And the law of entail is equally well understood, but it is in recent years avoided in various ingen ious ways. For example, by placing the property in trust; by incorpo rating estates and placing the stock in the hands of trustees, the corporation itself having a perpetual life. By the perpetual life o f corporations has grown up a method of evading the wise spirit of the rule forbidding primogeniture and forbid ding the accumulation of vast properties in a single hand. In my judgment there should be no apologetical treatment o f this matter. The accumulation of gigantic fortunes in a single hand, with the huge power of increase where the income can not be consumed, is dangerous to the commercial liberties of the people; and because dangerous to commercial liberties of the people it is dangerous to the political and civil liberty o f the people. o
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