sentatives, agents, deputies, attorneys, trustees, legatees, heirs, successors in the interest of said decedent or to any other person or persons, or to the survivor or survivors when held in the joint names of decedent and one or more persons, or upon their order or request, without retaining a sufficient portion of amount thereof to pay any tax and interest which may thereafter be assessed thereon under this act and unless notice of the time and place of such delivery or transfer be served upon the State Tax Commission at least thirty days prior to said delivery or transfer; provided, that the State Tax Commission or person by them in writing authorized to do so, may consent in writing to said delivery or transfer, and such consent shall relieve said safe deposit company, trust company, corporation, bank or other institution, person or persons from the obligations hereunder to give such notice or to retain any portion of said securities, deposits or other assets in their possession or control. And it shall be lawful for the State Tax Commission or county treasurer, personally or by representatives, to examine same securities, deposits or assets at the time of said delivery or otherwise.

Penalties-2. Failure to comply with the provisions of this section shall render such safe deposit company, trust company, corporation, bank or other institution, person or persons, liable to a penalty of not more than twenty thousand ($20,000) dollars, and in addition thereto said safe deposit company, trust company, corporation, bank or other institution, person or persons shall be liable for the amount of the taxes, interest and penalties due under this Act on said securities, deposits, or other assets above mentioned, and said penalties and liabilities of said safe deposit company, corporation, bank or other institution, person or persons for the violation of this section may be enforced in an action brought by the State Tax Commission in any court of competent jurisdiction.

Tax to be Deducted from Legacies, or Paid by Legatee of Special Property; Executor or Administrator to Collect Taxes on Land; Sale of Property to Pay Tax; Lien on Property to Secure Tax on Conveyances in Decedent's Lifetime-3. An executor, administrator, or trustee holding property subject to said property, shall not deliver property or a specific legacy subject to said tax until he has collected the tax thereon. When a specific bequest of personal property other than money is subject to a tax under the provisions of this act, and the legatee neglects or refuses to pay the tax upon demand, the executor or trustee may upon such notice as the probate court may direct be authorized to sell such property. or, if the same can be divided, such portion thereof as may be necessary, and shall deduct the tax from the proceeds of such sale, and shall account to the legatee for the balance, if any, of such proceeds, in lieu of the property. An executor or administrator

shall collect taxes due upon land which is subject to tax under the provisions hereof from the heirs of devisees entitled thereto, and he may be authorized to sell said land if they refuse or neglect to pay said tax. When a conveyance made by a decedent in his lifetime is subject to said tax, and the property thus conveyed, being personal property, is without the state, or is removed from the state before the tax is paid, such tax shall become a lien upon all the property of the decedent and shall be chargeable as an expense of administration; and the executor or administrator shall collect taxes due on account of such conveyances and may be authorized to sell any property subject to the lien of such tax, for the payment thereof, as in other cases.

Legacy Charged on Realty; Tax, How Paid-4. If a legacy subject to said tax is charged upon or payable out of real estate, the heir or devisee, before paying it, shall deduct said tax therefrom and pay it to the executor, administrator or trustee in the same manner as the payment of the legacy itself could be enforced.

Collection of Tax upon or Sale of Property Passing to Several Beneficiaries-5. When any interest in property less than an estate in fee is devised or bequeathed to one or more beneficiaries with remainder to others, and the interest of one or more beneficiaries is subject to said tax, the executor shall deduct the tax upon such taxable interests from the whole property thus devised or bequeathed and whenever property other than money is so devised or bequeathed he may, unless the taxes upon all the taxable interests are paid when due by the beneficiaries be authorized to sell such property or such portion thereof as may be necessary, as provided in Sections 5 and 8 and having deducted the unpaid taxes on such taxable interests from the proceeds of such sale, he shall account for the balance in lieu of the property sold as in other cases.

Penalty for False Statements or Reports—6. Every person who wilfully and knowingly subscribes or makes any false statement of facts, or knowingly subscribes or exhibits any false paper or false report with intent to deceive any appraiser appointed pursuant to the provisions of this Act, shall be guilty of a misdemeanor and punished accordingly.

Note The procedure suggested in Sects. 3, 4, 5 and 6 is, of course, only tentative as the organization of the state government and the probate procedure within the state must control in each particular case.

In case it is desired to tax the transfer of the personalty of nonresident decedents the Matthews' Flat Rate Plan, as in force in New Hampshire, is recommended. Copies of this law will be gladly furnished.

The members of the committee present at the conference and in

strumental in drawing up the above law were Jos. S. Matthews, New Hampshire; John Harrington, Wisconsin; Albert Handy, Prentice Hall Co., New York; Ralph W. Smith of California substituting for Ray L. Riley and William B. Belknap, Kentucky.

There were of course minor points of discussion and slight differences of opinion. Mr. Harrington concurred in the report only after stating his preference for the taxation of inheritances on the basis of the actual location of the property-whether representea by corporation securities or not. Since he realized this was for the present entirely unobtainable he joined with the others in their attempt to reform the present intolerable situation. The program as outlined by the National Tax Association calls for the abolition of the Federal Estates tax and the elimination of multiple taxation by the states with the adoption of the Matthews' Flat Rate Plan wherever duplication is unavoidable.

Besides those mentioned above as present the other members of the committee and several friends have done real work in helping with this law, Senator Law of New York, Professor Freund of the University of Chicago, and Mr. Huse of Massachusetts, in particular.

WILLIAM B. BELKNAP, Chairman,

University of Louisville

ALBERT HANDY,

Prentice-Hall Inheritance Tax Service

JOHN HARRINGTON,

Wisconsin Inheritance Tax Attorney

WILLIAM C. HARRISON,

Secretary, State Board of Tax Commis

sioners of Indiana

W. C. KEIRSTEAD,

University of New Brunswick, Canada

JOSEPH S. MATTHEWS,

Assistant Attorney General of New
Hampshire

A. J. MAXWELL,

North Carolina Corporation Commission

THOMAS REED POWELL,

Columbia University

RAY L. RILEY,

State Comptroller of California

LESSING ROSENTHAL,

Chicago, Ill.

THOMAS W. SIMS,

Alabama Tax Commission

SECRETARY HOLCOMB: May I interrupt the meeting just a moment? The committee on the apportionment of interstate business has done a whole lot of work, and it is only fair to permit them to introduce this short resolution, which some member of the committee has submitted.

(Secretary Holcomb reads resolution in regard to the rule of apportionment of income of mercantile and manufacturing concerns)

CHAIRMAN MCKENZIE: Under the rules of the association, the resolution will be referred to the resolutions committee. Before throwing this topic open for general discussion, I am going to ask Mr. John Harrington, a member of the committee, and a member of the staff of the Wisconsin Tax Commission, to speak to us for a few minutes and present his views.

I should just like to suggest to the speaker and the conference that as you all know we put over until tonight number three of the second session. If we are going to get through in any reasonable time this evening, the speakers will have to be bound strictly by the rules which we have adopted; otherwise you will be here until midnight.

JOHN HARRINGTON of Wisconsin: I think fifteen or twenty minutes will cover what I have to say.

Mr. Chairman and gentlemen of the conference: My name has been connected with this subject in the remarks of the chairman of this committee in such a way that it seems to me I should at least have an opportunity of defending a position which we take in our state. I might say further that we have not found any difficulty in applying the principles that will be found in this paper, in our state, and that the objections which have been offered will, I think, largely disappear when the question comes to real consideration.

You see, here is a system that has gone on for years, and we have become accustomed to it, and because of that custom, we naturally think that there is nothing else. I will take no more time to make introductory remarks and the paper will probably explain itself sufficiently.

THE LOGICAL BASIS FOR INHERITANCE TAXATION

JOHN HARRINGTON

Inheritance Tax Counsel, Wisconsin Tax Commission

It is not intended in this paper to assume the attitude of dissenting from the very capable and complete report of the majority of the committee on inheritance taxation. This paper should be considered rather a supplemental than a dissenting report. If it should be assumed that the more prevalent fundamental theory upon which the present inheritance tax laws of the states are founded is the

sound and correct theory, we can all join in the report as a whole, although we may still differ as to a few less important details.

But because there seem to be certain irreconcilable differences that persist, in spite of every effort to get together; and because these differences seem to extend to tax officia's, legislatures, and even the courts, it seems highly desirable at this time, if it can be done, to go back and re-examine these fundamenta's and to restate definitely what appear to be the basic principles which should govern in inheritance taxation, as viewed by the minority.

As sustaining our views of the need of such re-examination, 1 take the liberty of quoting from the preamble of resolutions adopted at the 1921 conference, as follows:

"WHEREAS this conference, although opposed to the levy of state inheritance taxes upon property passing at death under the laws of a state other than that in which the decedent was domiciled at time of death, recognizes the fact that such taxes are now imposed and are likely to continue in force for some time to come."

Is not this a rather despairing attitude, and an acknowledgment of weakness? This does not correspond with the facts, for real estate is now assessed for inheritance tax purposes in the state of its situs, and not at domicile, and is universally acknowledged to be properly so assessed; and real estate constitutes more than half of the property transferred at death. Why shou'd it be assumed that double taxation will continue? It is clearly unjust-aggravatingly unjust-that in one estate the transfer should be taxed but once, while in another estate, perhaps no larger, the transfer should be subject to the inheritance tax two, three, or four times. If you will examine the majority report, you will observe that very much of it is devoted to devices intended to minimize the evils of double and treble taxation. This should be unnecessary.

It will probably be agreed to unanimously that the first principle of inheritance taxation should be that the transfer of property at death should be subject to only one transfer or inheritance tax (excluding consideration of the federal estate tax). This principle should be fundamental, and should require no further argument nor elaboration.

Following this, we have another alleged principle, one that is assumed more often than it is expressed, although it is expressed often enough, as in the resolution above quoted. This principle may be stated as follows: The inheritance tax should be imposed upon the transfer of decedent's property at his domicile and where his estate is being administered.

This principle sounds obvious and as a matter of course; and consequently, as a general principle, has been little questioned or