Newspapers / Wilmington Morning Star (Wilmington, … / July 10, 1921, edition 1 / Page 11
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1 'J THE MORNING STAR, WILMINGTON, N: C SUNDAY, JULY 10, 1921 ELEVEN IT THEUNIVJEnSAL CAR " - ' ' 'i " 11 nunc t John I. Chipley, formerly part owner of the JonesTVIotor Sales Company, authorized Wilmingrton dealers in Ford Cars, Fordson Tractors, Parts and Supplies, has acquired the entire interest held in the company by C, H. J ones, who is no longer connected with the firm. J. Ben White, who has been managing the business for the past several months, will continue with the company and will be in active charge. Temporarily, the old name of the Ford representatives Jones Motor Sales Companywill be continued. ones Motor ales Company SALES AND SERVICE THE UNlVEnSAL CAR X III I IIIIIJLI.IJTI INHERITANCE TAXATION IN STATE OF NORTH CAROLINA Br WILLIS SMITH Inheritance Tax Attorney, Raleigh Paper Read July 8 Before the North Carolina Association of Superior ourt Clerk, in Seaslon at Wrigh trrille Beach. Contrary to the general Idea in heritance taxation is not & new device or fnrm of taxation, either in North '"aro.ina. or In the world at large. F.a'her it is a very old principle that ten in use In a great many coun try of the world and in a great many states of the American union. It has r"n a very dependable source of reve rv.iA from times of antiquity, and it Is said that it Is one of the forma of taxation in practice by the Ptolomles of Egypt. Furthermore. Gibbon in his H.'Ary of Rome says that it was in-tmcii-fi ;n:o Roman law by Augustus, f. tA -a? employed as a means of eup :""Tt!ng the Roman army. The tax is a source of revenue in rr" "f the civilized countries, known ' v ri f rent names in the various -.entries. England adopted it in 1780, fr.i has been highly developed t "-". and particularly In the Au 'ri'.lan states. It was first lntroduc--. . th United States by its employ- Trent Pennsylvania in 1826. There-af-e- -was adopted in Louisiana, Vi-eir:. and Maryland, and then in 1S46. t .vr, years after Maryland, North car'.ira passed Its first Inheritance law There are several decisions ' ' r -.r supreme court involving this e-- iaw. and its amendments, which I shall mention hereafter. This f ;-e with Its various changes and srr:T-i iments remained the law In this F'ft'A until its repeal in 1874, from 'Ah'h tim,? until 1897 North Carolina '. I'i v.r surh law. This is probably t .-. --,- g'lrprisins to a great many per ? ' r s who have thought that inherlt hr.rc taxation was a new fangled de- - in this state. The law has been '""."i very materially since 1901, s". 1 'here have been numerous decis- i nf nur courts which I will treat, T'.-.a f -irdamentil principle of the s that a man cannot carry with r . into the next world the posses i -"s v-e has acquired in this world. " rrofor. he must leave such possei-?--s to hm protected by the law of the -. To understand thoroughly the .'-;r.datibn principle it must be re- -",hered that there a time when state succeeded to all the property ' A possessions of a decendent. The r-ivii.er of taking property by will of h desv-ent is not one of the Inalien able rights of man. Both the law of and the law 6f descents are "at jres of the statute law. Without statutes property would pM, the death of the owner, to the rx- immediate occupant, or escheat th state. B in order that there might be '- orderly condition x established in :'.ized society the right wu given a dying person to dispose of his swessions by descent or by will. Tr.en. inasmuch as the dying person ad to rely upon the power of the to protect and give effect to -r:- disposition, it was but natural t - at the etate should feel that it was titled to some part of that which it had allowed to pass, and which It must recognize and protect. In some states and countries very heavy progressive rates of tax are imposed, and this is done not jnerely for the amount of tax that may be derived, but also to aid in the break ing up or larsre estates, it is now recognized by most all economic au thorities that inheritance taxation is a form of tax that is less burden some to those who have, to pay it, than any other form of tax. The ex emptions to dependents are usually very liberal and in this way hardship is avoided. It is a means of reduc ing the patrimony of the idle rich, and those who have to pay the large amounts never really miss the tax paid. Of course It could be a dang erous instrument in the hands of radi cals who have no respect for the rights of private property. The grad uated and progressive rates establish ed in many Jurisdictions including our own, recognize the principle that the son of the poor man who Is left bare ly enough with which to start off in Mfe, this inheritance being the re sult of labor and saving on the. part of his hard working parents, ought not to pay proportionately, the same as those children of fortune whose very whim and caprice can be satis- fled by the riches left them, witnout any effort on their part. "When inheritance taxation is con sidered as a property tax, if, of course, violates the fundamental and uni versal requirement that all taxatI6n shall be applied equally as to Its burdens, and its application shall be uniform and not discrimnatory. But Inheritance taxation is not a property tax, but a tax on the right to pass and receive property either by descent or by will. This must be kept clearly in mind and when considering inheri ly In mind when considering inherit ance taxation laws. Of course the inheritance tax law has not passed without many a chal lenge, the first of which was. as might be expected, a to its constitutionali ty. It has been such a long time since an individual did not have the right to Inherit, or to devise or bequeath his property that the average man for gets that It is by the exercise of power by the state that these rights are guaranteed him, and" that he had no such right inherently. In the case of Pullen vs. Commissioners 66 N. C. 361, It was held by our court that such a law was constitutional. In the opinion in that case. Justice Rod man says: "But we do not regard the tax In question as a tax on property," but rather s tax Imposed on , the succes sion; on the right of the legatee to take undex-111. or of a collateral dis tribution in the case of intestacy Is there any reason 'why -the state shall be denied the power to tax a aucces sion. whether it be by it Inter vivos or by will or intestacy?' Property it self as well as the succession to it, is the creature of positive law. The right to give or take property is not one of those natural and inalienable rights which are supposed to precede all government, and which no government can rightfully Impair. There was a time, at least as to gift by will, it did not exist; and there may be a time again when it will seem wise and ex pedient to deny it." Justice Brown, in re Mann's estate, 138 N. C, said: "The right to take property by de vise or descent is not one of the natural rights of man, but is the crea ture of the law. Should the supreme law. abolish such rights, the property would escheat to the government or fall to the first occupant. The au thority which confers such rights may impose conditions upon them, or take them away entirely." The constitutionality of the law was again upheld in the cases of State vs. Bridgers, 161 N. C, 246, and Norris vs. Durfey, 168 N. C, 321. The first of these cases also determines certain questions as to the methods of ap praisements and collection of the tax and also as to the meaning of the law with respect to exemptions, and con strues the In loco parentis part of the statute. This case also settled the question that where there is a differ ence between the law in force at the decedent's death, and that in force at the time of collection, the first law will control as to the rate and amount ef tax, and the statute in force at the time of collection, as to the meth ods of appraisment and collection. The act of 1846 chapter 72, laws of 1846, taxed collateral kindred arid strangers, except widows of deceased at 1 per cent. There were several decisions of the supreme court construing this statute, the first of which was in the case of Huner et al vs. Husted, 45 K' C. 141. This decision settled the question so often asked by persons not thoroughly familiar with the inheritance tax law, that the tax is paid by the legatees or distributees, respectively, and hot by the estate of the deceased. This is still the law in this state, as the tax Is on the takers of the property, and not on the estate tax, as is the federal estate tx. The next court decision in this state, in re: Alvany vs. Powell N. C- 60, In which It was determined that a transfer of property within this state by a non-resident decedent was tax able under the law of 1846, and euch is our law today. Then the case of Barringer vs. Cowan, 65 N. C. 436, where It was held that a bequest to a church and to a college may be taxed. This Is the status of our law today as to such in stitutions without the state of North Carolina. The next question presented to the court was In the case of State vs. Brim, 67 N. C. 300, in which it was held that a resident next of kin was not subject to the law where the de cedent died a non-resident, and his estate was also outside of North Caro lina. The mere fact that the next of kin was a resident of North Carolina did not subject him to the tax. In the case of Attorney-General vs. Allen, 69 N. C. 144 chapter 99 of the revlso code was construed as to the payment of the tax by the executor or administrator into ' the clerk's office, at the time of settlement with legatee. The tax on a legacy or bequest in remainder after a life estate was held to be taxable-and due immediately and not. when the legacy vests. In At torney-General vs. Pierce, 59 N- C. 240. . t,- ? The case of State V8, Brevard, 62. N. C. 141 involved the question as to whether or nbtftejfcecytor .was to be chargeable w'i'tfei The'tax on valueless currency that ;Kf left on his hands as a result of the war p 1861-65 and the court held that it depended on whether or not the executor was required to make good ha valueless currency in his setlemenf 'with the legatees. Of course if the1 -legatees received full value instead .-. of the valueles currency, then the tax would have to be paid. The above cited cases .together with th case of Pullen vs. Commissioners hereafter mentioned constitute all of the decisions of our court prior to those cases involving the law or 1901, and the..several amendment's thereto. The next question determined by. our supreme court was in the case of Xor ris vs. Durfey. 168 N. C. 321, and it was really the decision in this case that gave new life and effect to our law. The law with respect to personal property had been in the statute books since 1897, chapter 168, and this law imposed a small tax on both direct and collateral heirs. It seems, though, that not much if any, attention was paid to its enforce ment, and it was amended by the act of 1901, chapter 9. Then at the ses sion of 1905 the legislature amended the law so as to make it operate oh both personal and realty. There wa some slight defect in the wording of the act, which was continued through the acts of 1907 and 1909. It seems that bofth the attorney-general and the state treasurer nad construed thse acts to exempt real estate, and Just afterwards the enforcement of the law was turned over to the state tajsw commission, and this case was mada a test case, and went to the supremo court from "Wake county. The court held that the law applied to realty as well as personalty, and that the construction placed on the law by administrative officers of the" state were not binding on the courts. The estate in this case then paid to the stae taxes to the amount of more than $9,000 which was the largest amount paid by any single estate up to that time, except the estate of George W. Vanderbilt which paid the tax on realty as well as on person alty not contesting" the law as to the realty. This decision was really the begin ning of the law's strict enforcement, the case having been decided on-l February 24, 19 1 6. Immediately thereafter, the legislature, then in ses sion authorized, the state tax commis sion to emply special assistants or counsel to enforce the law, the com pensation to be on a commission basis, not to exceed 5 per cent of tle amounts collected. The tax commis sion then employed assistants and at torneys in various parts of the state, biit only a few of those employed ever did 'any real work on , the prpppsition. Everywhere the Jaw met with opposi tion, and in some cases defiance, and a great many local attorneys of course did not feel justified in stirring up the animosity of some of their county's most prominent citizens. One of the chief reasons for so muchopposition was that those employed were In structed to investigate all settlements of old estates made since the passage of the law, -and this, meant that Jn some .cases the. tax was collected many years after an estate had been settled. This did not mean,, however, that in nocent parties were made to suffer, as the collection of the tax was made from jthe parties who owed the -tax, and so far as I know, there was never a case where an executor's or adminis trator's' bond was .called upon. Just why the law was allowed to become and remain a dead letter for so long, I 'do not know, but when the state tax commission took charge -of th matter, and the legislature of 1915 provided the commission with means of enforcing the Haw," a source of revenue of tremendous importance was opened up,, and today this is one of the main stfurees of the state's revenue. In the year 1914 the state collected from, inheritance tax to the extent of ?19,89a9. In 1915 it col lected 531,495.06, and this was the year that the enforcement was really begun. The following year there was colleoted 1153,759.18, and during the fiscal year 1920 the state received from this tax ?603,229,92, The tremendous development of this means of revenue earf be realized, when it is seen that in 1901 there was received by the state the sum of $237.07. And I might pause just here to say, that the first item of $6.45 was collected by W. S. Stevens, clerk of the superior court of Johnston coun ty. During the years 1903, 1904, 1909 and 1913 the state collected from $12,000 to $16,000 in round numbers, each year, these collections being swelled by several large estates pay ing th tax on personalty at the time of settling the estates. The following schedule shows the inheritances . taxes received by 5the gtateV every year, from 1901 to 1920; .is shown by th5 " reports in the state auditprs office. 1901 $ 237.07 1903 t 4,240.69 1903 12,578.82 1904 ... 16.000.J6 666 cures Malaria, Chills and Fever, Bilious Fever, Colds and LaGrippe, or money refunded. Adv. 1905 1906 1907 1908 1909 1910 19H 1915 tf.325.14 4,673.41 7, 792. 06 5,533.60 14,795.87 6,159.80 9,822.32 5,264,65 NORTH CAROLINA BONDS FOR SALE! BUY A BOND Bids open in my office in Raleigh at 12 o'clock, Friday, July 16th. For building good roads and edu cational and charitable "Institutions North Carolina is issuing bonds in denominations of $100, $60D and $1,000. You can buy a $100 non-taxable 6 per cent band for $100.00 and accrued in terest, which amounts to $100. Jl. This beats a 6 1-2 per cent tax-payinsr in vestment. Bids for $J560 and $1,000 bonds will require a check for per cent of the amount bid. "With a $100 bond no check is required. There is no better way to invest your savings' Apply to me for further information. B. R. LACY, State Treasurer. Jul. 8-10-12-14. 1913 ...."r. 16,67133 1914 . 19,899.19 1915 31,495.06 1916 153,759.18 1917 , 296,951.90 1918 376,437.72 1919 595,681.94 1920 603,229.92 One of the troublesome questions that has presented itself has been as to th"at part of the statute placing those who stood in relation of child to the decedent In the first class and allowing such the lowest rate of tax, along with lineal issue, direct ances tors, husband, wife and adopted child. Thi part of the statute was construed by the court In Re; Estate of John H. - (Continued on Page Twelve.) MULES AND HOKSES FOR SALE R TRADE AT SfT STABLES Prices an Term Are Right ' WAGONS, BUGGIES AND HARNESS J.P.NEWTON IT 8. Seeoad St. TeLepaoe S10 Announcing the Opening of . ' THE ART SHOP OCEANIC HOTEL, JULY 9 Art Laces, Chinese Silk and Canton Crepe Kimonas, Rmbroidered Linen, Chinese Slippers, Oriental Perfumes and Novelties PAY US A VISIT A, J. FARGO Wh BUY YOUR GASOLINE AND OILS ere Service Serves Pioneer Service Station r - (Formerly Y and F Service Station) NEAR WILMINGTON HOTEL FISK TIRES SUNOCO OILS CARS WASHED ACCESSORIES I II t - A.
Wilmington Morning Star (Wilmington, N.C.)
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July 10, 1921, edition 1
11
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