The existence of a number of political units, whose interests are not separate and distinct, and the attempt of each to adopt a form of taxation designed for its own needs, with little consideration for those of its political neighbors, has caused many serious problems to those seeking to secure justice in taxation. This situation has enhanced the problem of securing just inheritance taxation, and has manifested itself in particular in the United States, with its many political divisions. A few of the states do not use the tax, while in the others it varies from a half-hearted attempt to secure a little revenue from collateral heirs to highly progressive rates upon all estates. The laws not only lack uniformity in respect to rates and progression, but in the bases upon which the tax is levied. The result is that some estates are subject to more than one tax, while others escape the tax that they are really expected to pay.

Domicile of Decedent. - To a large extent the inheritance tax is placed at the domicile of the decedent. Since the burden varies to such an extent in the different states, it becomes profitable, in the case of large estates, to change the place of residence to a state with lenient considerations toward bequests, although no change be made in the business-, or property, or economic interest. Because of the increasing adoption of the income tax as a source of state revenue, the selection of a suitable domicile will assume an aspect of even greater importance. A state which is lenient in the matter of income taxes, as well as in the levy of inheritance taxes, is bidding to become a popular place of residence for men of wealth. This is noticeable in the Eastern states, where the states are small and where there is a large amount of wealth. The possibility of this result, no doubt, has had much to do with keeping a number of states from making a greater use of inheritance taxes. They have feared to increase the severity of the burden beyond that of neighboring states lest the wealthy citizens change their place of domicile.

Situs of Property. - The state frequently imposes an inheritance tax upon the basis of situs of the property, and upon the personal property of individuals living in the state. Many states go farther, and impose the tax upon shares in domestic corporations, while many go still farther and place the tax upon shares of corporations within the state owned by a nonresident. Some tax the shares at their physical location; for example, shares of stock deposited in a bank for safe keeping, no matter where the residence of the owner. Some have even used indebtedness as a base - that is, bonds would be taxed in the state from which issued, no matter where the owner lived or died.

The resulting complexity of the use of these diverse attempts can easily be imagined. Two, three, four, and even five taxes may be collected from one estate - the injustice of which no one will deny. Suppose an individual dies in state A, who was a citizen of state B, owned $100,-000 worth of bonds of a corporation chartered in state C, the actual property of which was in state D, while the bonds were in a safety vault in state E. The inheritance tax law of A taxes the property of every decedent of the state, B that of every citizen, C the bonds of corporations chartered within the state, D the property where located, and E the situs of the bonds. In this case the bonds would bear the tax rate in force in each of the five states. This, of course, would be an extreme case, yet examples of double and triple taxes upon estates are not uncommon.

Stability and Uniformity Desirable. - This chaotic condition is far from satisfactory. The expense and delay in settling estates is often increased many fold, while the rulings of the courts have become so numerous and so hair-splitting as to add greatly to the complexity of the situation. The instability of the various laws, moreover, is not conducive to the comfort of investors. Nineteen states modified their laws in 1919. The law in New York State has been amended more than forty times since its adoption in 1885. One never knows what may be the condition a few years hence. While no single state imposes an excessive burden upon estates, yet the piling up of double and multiple taxes may develop an excessive burden and even necessitate a dismemberment of the property in order to be able to pay the tax.

While a better situation is unquestionably desirable, a remedy seems far to seek. Some uniform system which would eliminate double taxation would be the logical solution. To secure cooperation among the states - each with its own selfish interests paramount - to the end of a uniform method of inheritance taxation is too much even to hope for. The recent reentrance of the Federal government into this field of revenue, however, presents a possible solution, improbable as it may seem. Uniformity could be secured by the various states giving up their diversified systems, and allowing the Federal government to occupy the field with a uniform law. The machinery of transfer located in the states would, of course, have to be used, and the Federal government could distribute back a part of the revenue collected. Rates, in this case, could be high enough to make the system a powerful source of revenue. Practically unsolvable problems arise, however, in securing the consent of the states, and in finding some practical basis for redistributing the amount collected back to them.

Advantages of Tax. - In spite of the difficulties, however, the inheritance tax is destined to play a role of much greater importance in the fiscal systems of our states, and probably in that of the Federal government, than it ever has in the past. Its outstanding advantages cannot but be favorable to its further extension. The opportunity for fraud and evasion is minimized, since the machinery of the courts must be used in making the transfer of property. The receipts come in throughout the year, with few payments compared with the amount of revenue received. For large political units, moreover, the yield is remarkably uniform. It is a tax well suited to provide an elastic feature - a rise in the rates will not cut off the source of the tax by causing fewer deaths, although it may lead to greater evasion. The incidence of the tax, moreover, is certain - a definite amount is taken from the estate before it reaches the recipient - the burden falls upon him, and he cannot shift it. It is a tax which conforms well to Adam Smith's four canons: it falls according to ability, is certain, is paid at the time most convenient, and should be an inexpensive tax to collect.