A consideration of justice in taxation reveals that, through a process of evolution, the most commonly accepted principle for the levy of taxes is ability to pay, with perhaps some consideration for the utilitarian principle of the greatest good to the greatest number. To students of fiscal problems, at least, a study of the inheritance tax from this standpoint assumes the role of primary importance. Many arguments have been advanced to justify its place in fiscal systems, some of which are worthy of review.

Payment of Back Taxes. - One of the earlier contentions for the tax was that it was but a collection of the taxes which had not been paid while the fortune was in the process of accumulation. This is commonly called the back tax argument. The reasoning has been effective, and not without foundation, because of the widespread evasion of personal property taxes. In fact, this argument, perhaps, has been used more extensively than any other in securing inheritance tax legislation. From the point of pure justice, however, the reasoning cannot stand. The evasion of taxes for different accumulations of wealth has by no means been the same, and yet it is impossible to attempt any discriminations on the basis of the extent that taxes have been evaded. In this respect it is a tax which falls alike upon the just and the unjust.

A slightly different argument, and one whose force is somewhat diminished since the extensive introduction of income taxation, is that the inheritance tax represents the payment of a tax which should, in justice, have been levied during the life of the decedent. It is simply accumulation of past property taxes, or income taxes, which were never levied and which are collected at the most convenient time - when the individual has no more need for his accumulations.

Conformity to Ability to Pay. - The inheritance tax, in large measure, conforms to the principle of ability to pay. The payment of no other tax is perhaps so lightly felt. It is paid after the property leaves the hands of the decedent, and before it reaches those of the recipient. An inheritance is a sudden and often unexpected receipt of property. This additional property creates taxpaying ability, but never is the ability so great as before the property enters into the activities of the benefactor. In a few cases, of course, this increase in ability fails to materialize, as when a provident husband is taken from a wife and dependent children. Such situations are the exception, however, and can easily be cared for by the formulation of the law. The tax may be the source of much revenue, with a minimum of sacrifice and a small derangement of enterprise, and in this respect corresponds to the modern utilitarian ideals of justice.

It is not surprising to find persons who are recognized as conservative and yet who are ardent enthusiasts for the inheritance tax. With the constant growth in the functions of the state, the demands for revenue from the old sources began to cut deeply, and some relief through this little-used source is looked upon with pleasure. The ease with which the burden is carried also makes a strong appeal. Where to get the funds to carry on many desirable state functions is a pressing problem for which the inheritance tax may be used as a partial solution. Many believe, further, that a proper use of this tax would cure much of the Socialistic agitation against wealth, since there is very little unearned and idle wealth outside of inheritances.