1. An estate tax is not a tax upon the property of which an
estate is composed, but is an excise upon the transfer of or
shifting in relationships to property at death. P.
307 U. S.
60.
2. The proceeds of a War Risk Insurance policy payable to a
deceased veteran's widow were properly included in his gross estate
for the purpose of computing the federal estate tax. Revenue Act of
1926, § 302(g), as amended. P.
307 U. S.
60.
3. Section 22 of the World War Veterans' Act, 1924, providing
that such insurance "shall be exempt from all taxation," does not
prevent. P.
307 U. S.
59.
4. No provision of the Government's contract with an insured
veteran is impaired in violation of the Fifth Amendment by the
inclusion in his gross estate of proceeds of a War Risk Insurance
policy for the purpose of computing the federal estate tax. P.
307 U. S.
60.
98 F.2d 734 affirmed.
Certiorari, 305 U.S. 591, to review the affirmance of a decision
of the Board of Tax Appeals sustaining a determination of a
deficiency in federal estate tax.
Page 307 U. S. 58
MR. JUSTICE BLACK delivered the opinion of the Court.
The sole question is whether proceeds of a War Risk Insurance
policy payable to a deceased veteran's widow were properly included
in his gross estate under a Federal estate tax.
The Federal estate tax in question [
Footnote 1] included in a decedent's gross estate the
amount in excess of forty thousand dollars received by
"beneficiaries [other than his estate] as insurance under policies
taken out by the decedent upon his own life." This veteran's total
life insurance for beneficiaries other than his estate exceeded at
death the statutory exemption of forty thousand dollars, if his War
Risk Insurance policy payable to his widow in the sum of ten
thousand dollars is included. The Commissioner assessed an estate
tax measured by this excess. As decedent's executor, petitioner
claimed that proceeds of the War Risk Insurance policy could not be
included in the estate because of Section 22 of the World War
Veterans' Act, 1924, providing that such "insurance . . . shall be
exempt from all taxation." [
Footnote 2] The Board of Tax Appeals upheld the
determination of the Commissioner, and the Circuit Court of Appeals
affirmed. [
Footnote 3]
Page 307 U. S. 59
Congress has manifested a consistent policy in the Revenue Acts
from 1918 to 1934, when the veteran died, by impositions of estate
taxes upon transfers at death of proceeds of all life insurance
(not payable to an insured's estate) in excess of forty thousand
dollars. This has been in harmony with a general plan of graduating
income and inheritance taxes to accord with the respective sizes of
incomes and estates. [
Footnote
4] And the Treasury Regulations have stated that
"The statute provides for the inclusion in the gross estate of .
. . [a]ll insurance [not for the benefit of an estate] . . . to the
extent that it exceeds . . . forty thousand dollars. . . . The term
'insurance' refers to life insurance of every description. . . .
[
Footnote 5]"
But petitioner invokes the provision of the World War Veterans'
Act, 1924, that insurance thereunder "shall be exempt from all
taxation." An amendment to that Act of August 12, 1935, [
Footnote 6] provides that "Payments of
benefits due or to become due . . . shall be exempt from taxation.
. . ." However, this amendment served only to clarify the original
provision for exemption, without more. [
Footnote 7] Unless resort is had to enlargement by
implication, this exemption means only that the proceeds or
benefits of a War Risk policy are exempt from taxation.
Page 307 U. S. 60
Exemptions from taxation do not rest upon implication. [
Footnote 8]
An estate tax is not levied upon the property of which an estate
is composed. It is an excise imposed upon the transfer of or
shifting in relationships to property at death. [
Footnote 9] The tax here is no less an estate
tax because the proceeds of the policy were paid by the Government
directly to the beneficiary; the taxing power was nevertheless
exercised upon "the transfer of property procured through
expenditures by the decedent with the purpose, effected at his
death, of having it pass to another." [
Footnote 10] In an analogous situation, Federal bonds
exempt by statute from all taxation have been held subject to a
Federal inheritance tax. [
Footnote 11] And State inheritance taxes can be measured
by the value of Federal bonds exempted by statute from State
taxation in any form. [
Footnote
12] Similarly, the statutory immunity of War Risk Insurance
from taxation does not include an immunity from excises upon the
occasion of shifts of economic interests brought about by the death
of an insured.
Petitioner makes the further point that the inclusion of
proceeds of the War Risk policy for purposes of an estate tax
amounts to an impairment of the Government's contract with the
insured veteran, in violation of the Fifth Amendment to the
Constitution. But neither the Act of 1924, as amended, nor any of
the provisions of the War Risk Insurance Act purported to exempt
War Risk Insurance from death duties. Therefore, no statutory
Page 307 U. S. 61
exemption which could be considered a provision of the insurance
contract has been affected by the imposition of the estate tax in
this case. The judgment is
Affirmed.
[
Footnote 1]
§ 302(g) Revenue Act of 1926, as amended.
[
Footnote 2]
43 Stat. 607, 613.
[
Footnote 3]
98 F.2d 734. State courts have differed as to whether proceeds
of War Risk Insurance are subject to death duties imposed by the
States.
See, for example, In re Estate of Harris, 179
Minn. 450, 229 N.W. 781,
Tax Commission v. Rife, 119 Ohio
St. 83, 162 N.E. 390,
Wanzell's Estate, 295 Pa. 419, 145
A. 512,
Watkins v. Hall, 107 W.Va. 202, 147 S.E. 876
(holding these proceeds not subject to such excises), and
Matter of Sabin, 224 App.Div. 702, 228 N.Y.S. 890,
Matter of Dean's Estate, 131 Misc. 125, 225 N.Y.S. 543
(
contra). In view of this fact and the importance of an
authoritative interpretation of the Federal statutes involved, we
granted certiorari. 305 U.S. 591.
[
Footnote 4]
See 44 Stat. 9, 21, 22, § 211; 48 Stat. 680, 684, 754,
§§ 12, 405(a).
[
Footnote 5]
Treasury Regulation No. 70, (1929 Edition), Articles 25 and 27;
Treasury Regulation No. 80, (1934 Edition), Articles 25 and 27.
[
Footnote 6]
49 Stat. 607, 609.
[
Footnote 7]
Lawrence v. Shaw, 300 U. S. 245,
300 U. S.
249.
[
Footnote 8]
New York Rapid Transit Corp. v. New York, 303 U.
S. 573,
303 U. S.
592-593;
Trotter v. Tennessee, 290 U.
S. 354,
290 U. S.
356-357;
J. W. Perry Co. v. Norfolk,
220 U. S. 472,
220 U. S. 480;
Chicago Theological Seminary v. Illinois, 188 U.
S. 662,
188 U. S.
672.
[
Footnote 9]
Reinecke v. Northern Trust Co., 278 U.
S. 339,
278 U. S. 347;
Chase National Bank v. United States, 278 U.
S. 327,
278 U. S. 334;
United States v. Jacobs, 306 U. S. 363.
[
Footnote 10]
Chase National Bank v. United States, supra,
278 U. S.
337.
[
Footnote 11]
Murdock v. Ward, 178 U. S. 139.
[
Footnote 12]
Plummer v. Coler, 178 U. S. 115.