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I was sailing for Europe, and I heard nothing about the hearings until after I returned, when I got a very interesting account of the hearings from a member of this association who was down there, though not taking an active part, a man who is experienced in business and legislative matters and took the whole performance in and judged of it, it seems to me, very shrewdly. The members representing the states went down there without any marked inclination to sink their individual preferences and to stick to essentials; they magnified their differences and one ate up the other's argument, with the result that the effect on the committee was very unfortunate. Some of them argued that the supreme court was wrong, like the water that went over the dam, and got nowhere. Others said that there was no particular trouble in their states, because they stick to the general property tax, but that the amendment might be a good thing, and it was immediately pinned onto them that their states hadn't any trouble, and so on, and so forth. So I want to make the suggestion that we sink our differences. I don't care about the real estate thing, one way or the other, unless it will help to get something from Congress that will be practically useful.

CHAIRMAN Hair: What is the pleasure of the conference? I understood that it was impossible to hold a meeting of the tax association together for more than two hours, but we have done it for nearly four.

SECRETARY HOLcomB: I would suggest about extension of remarks in the record, that it should be left to the executive committee of the association. We shall have to limit this somewhat, or we shall have a volume that cannot be taken care of.

E. F. COLLADAY: I shall not take more than three minutes-because I shall have something further to say to the committee on resolutions, and I only rise at this time because the gentleman sitting over there immediately after the beginning of the proceedings today, and after Senator Law's report was read, suggested that the gentleman from the District of Columbia ought to be heard from. Now, Senator Law referred to certain decisions in the District of . Columbia, with which I am somewhat familiar, but I will thrash that out in the committee on resolutions. The matter has been pretty well covered, but, by reason of being in Washington during all the time that these hearings have been had and during the time this legislation has been under consideration, I have had some knowledge of the course of events there, and I wish to suggest that any proposal of this convention--if the convention is to be considered as presenting any more than merely the demands or decisions of the tax commissioners as a body-should have some flexibility, more flexibility than it will have if a resolution is

course.

adopted merely requesting the passage of the Kellogg bill. The matter has gone beyond that stage; there have been hearings on top of hearings.

Now, I have great respect for President Lord, but when he said in his address last night that the bill brought out by the House of Representatives was passed without opposition, I take it the impression would be gathered therefrom that it was a mere perfunctory matter, but he gave the wrong impression, unintentionally of

The proceedings of that day in the House of Representatives were almost wholly devoted to this business. Prior to that there had been weeks of hearings by the house committee on banking and currency, which is made up of able legislators from all over the United States, at which Mr. Law and other men of this organization and men representing the bankers were fully heard. There were only two votes in that committee in favor of the proposition of the tax commissioners, and in the house the vote was 201 to 28 in favor of the bill as passed.

Now, succeeding that, in the senate, the matter has been referred to an unusually able subcommittee of the committee on banking and currency, namely: Shortridge, Pepper and Glass. They know their business; they know the questions that are involved here, and they are studying that with the utmost care. They have gone beyond the stage of any particular bill, and have reached the stage where they are hunting for a solution of the problem, just as you gentlemen here have been hunting for a solution in the last hour and a half, at least, of this discussion; going from point to point and thrashing it out and endeavoring to see what the effect will be.

Now, my suggestion as a member of the national tax association-a new member, it is true; I joined last year and attended at Bretton Woods—my suggestion is that you give some flexibility to your action here; that you send a committee which will have power to deal with the suggestions which probably will come out of the meeting of the American Bankers' Association the first week in October, and the suggestions that will come out of the serious study of all these phases of the matter which have been developed and discussed here this afternoon pro and con, by each of the three senators who will have to write this report.

I might say that I think Mr. Tobin is correct. If the national tax association and the conferences which it conducts annually are to have the greatest effect—the highest standing before the people of this country—it will be much better to adhere to the enunciation of broad principles, rather than to advance into the attitude of advocating a specific proposition. I thank you.

CAPTAIN W. P. WHITE: Motion to adjourn. (Adjournment)

TENTH SESSION

THURSDAY EVENING, SEPTEMBER 21, 1922

CHAIRMAN LORD: The conference will be in order.

The most important industry in this country, and I apprehend in every country on the face of the earth, is the farming industry. Most of the world lives off the farmer in the final analysis. We are fortunate in having with us at this gathering a gentleman who for several years has been connected with one of the largest and most influential farming organizations in this country, if not in the world, and a man who has made an exhaustive study of taxation, who has decided convictions upon the question, and who represents upon economic questions the aspirations and the feelings of the farmers of that great organization, and I am going to call on that gentleman to preside at this meeting this evening. Mr. H. C. McKenzie, of New York.

CHAIRMAN MCKENZIE: Mr. President and gentlemen of the convention : It isn't an easy job for the farmers to make speeches, so that I am not going to make much of a speech in taking the chair tonight. I do want to say, however, that personally I very much appreciate the privilege I have had last year and this, of sitting as a member of this conference. I think that our farmers' organizations are thoroughly convinced of the usefulness and the service which this organization is rendering to the people of the United States, and in explanation of the farmers' position on ques. tions of taxation, I want to say, or repeat what our president has said on a great many occasions, and it is this, that the farmers as a rule are not asking for themselves any special privileges, but only that the people in the country should receive a square deal.

The farmers are willing as a rule to pay their fair share of the cost of supporting our government, and what we ask is that the burden which we all have to bear and which is a tremendous burden, shall be equitably distributed among the people of the United States.

The first item on the program this evening is inheritance taxation. The presentation and discussion of the report of the committee on inheritance taxation will be by Mr. William B. Belknap. of the University of Louisville, chairman.

William B. BELKNAP: I am glad to see a little larger audience than we had last year for our report. You remember they put it last on the program and they did not embarrass us very much, because there weren't very many people to worry about when we talked to them.

There has been a little hope and joy instilled into the inheritance tax situation in this country during the year. There has also been a good deal of the reverse experience. Mr. Matthews' flat rate plan has been working in New Hampshire, and Virginia has followed suit and passed an identical statute. There is one other bright spot; California has reduced her inheritance tax. She stood pretty close to the top of the list a while back, but she no longer holds that proud position.

Your committee has been at work for three years; some of the time we worked fairly hard and most of the time not very hard, but we have considered very many different angles of this question. We found out by last year that something had to be done. Whether we are going to be able to do it or not is a question, but we did come to the conclusion that we should have to get the federal estate tax repealed. We are going to try to confine the state taxes to the state of domicile, if possible, and if not, to urge the Matthews' flat rate plan for the transfer tax on non-resident personalty. During the year there have been decisions of the courts, which I am going to read to you, which perhaps open a way for getting rid of one or another of the species of multiple taxation which have added tax on tax until, as you remember, under the present conditions, you are liable to run up a one hundred and thirty per cent tax on an estate. The tax is liable to vary, on even a moderate sized estate going to fairly close relatives, all the way from 4% or 6% to 60%, according to where the decedent happened to live, and according to how the estate was invested. Those conditions, of course, can only lead to trouble in the end.

After a good deal of study, there seems to be perhaps five different ways of arranging inheritance, or death taxes, so that we may get away from this multiple taxation; five possibilities; I don't mean that they are probabilities. The first and oldest of the plans is that of Professor Adams, which he proposed to this association a number of years ago, namely; to let the federal government take over the collection of all death taxes and apportion out to the states, on some sort of a basis — domicile or transfer or situs of property, or a combination of them a part of the tax thus collected. That you have heard pretty thoroughly discussed by Professor Adams, and if you have not done so, you may read it in the proceedings. Two years ago there was a paper by Professor Gerstenberg at Salt Lake City on that same idea. There is also the idea of the Wisconsin people, which, carried to its logical conclusion as they have not carried it, would limit inheritance taxes to one tax. In a paper that follows mine, Mr. Harrington is going to set forth that idea, in all its purity and beauty, and shorn of the evil associations which it has sometimes had. If I own stock in a railroad that runs through Nevada and I die, my estate pays to Nevada a tax on that proportion of the stock that represents that railroad's property in Nevada. That is what I have called the Wisconsin idea, only Mr. Harrington proposes not to have any tax at the place of domicile on extra-state personalty of that kind. The tax will all be referable to actual property. That is what I may term for this evening the Harrington idea. He is perhaps the best exponent of it in the country.

Then there is a plan which I ran into this summer in England. The British Empire has had somewhat the same problem that we have had; that is, they have Canada, Australia, New Zealand, South Africa &c., and a great number of people owning securities and property in those places live in England. The English death taxes are high. As you know, they run to practically fifty per cent, on estates of two million pounds or over $10,000,000. It is not a progressive rate as we usually levy it; so that their death taxes are heavy; if they levied their taxes as we levy ours and piled them up, 130% would look small. The result is that the English have worked out the scheme of taxing death transfers only at the point where the transfer takes place. We do that with real estate here. If I own real estate in Wisconsin and live in Illinois, there is no tax in Illinois on it when I die, but there is tax in Wisconsin. The English have followed that idea through to its logical conclusion. That is, impose the tax in the place where the transfer of property legally takes place. That is a possible solution for us, but not a probable one. It is almost inconceivable that the legislators in our various states would ever agree to giving up the tax on the basis of domicile, on property of people living in the state. They want that tax and they are so used to thinking of it as belonging in the state that it is very difficult to think of them as saying, for instance, that they won't tax United States Steel stock, because New Jersey is the place where that stock is transferred. Of course, New Jersey would like that; so would a number of other corporation states, as you might call them-states where a lot of corporations are incorporated; but, as a general rule, you could not get that across with the legislatures.

For a number of years the fourth plan, which I may call the domicile plan, was fought for by this association; that is, to get a tax levied only at the place of domicile, except, of course, in the case of real estate, but as to that, really following the underlying idea of the English plan. That is, property is really transferred under the laws of the state of domicile, as I understand it-I am not a lawyer-but that is the general theory I have about it. Real estate is transferred in the state where it is located.

You remember that this association fought hard for that par

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