The inheritance tax law of Illinois, of June 15, 1895, (Laws of
1895, page 301), makes a classification for taxation which the
legislature had power to make, and does not conflict in any way
with the provisions of the
Constitution of the United States.
This is a bill in equity filed in the Circuit Court of the
United States in and for the Northern District of Illinois by
Jessie Norton Torrence Magoun, a resident and citizen of New York,
against the trust company, as executor of and trustee under the
last will and testament of Joseph T. Torrence, deceased, and the
County Treasurer of Cook County, Illinois, both residents and
citizens of Illinois, to remove a cloud from the real estate
devised by said decedent to the complainant, and to enjoin the
first-named defendant from voluntarily paying, and the county
treasurer from collecting or receiving, the inheritance tax,
amounting to more than $5,000, alleged to be due upon the entire
estate of said decedent, and for which the complainant's interest
in said estate was contended by the county treasurer to be
liable.
The bill set forth the will of the decedent; a description and
valuation of the real estate and personal property left by him,
amounting in all to $600,000 above his debts, and the demand of the
county treasurer for the inheritance tax, which by the act in
question is made a lien upon all of said property; the request of
the complainant to the defendant trust company not to pay the same,
and to contest the constitutionality of the act, to refrain from
paying the same voluntarily and without protest, and to await the
commencement of legal proceedings to enforce the same; the refusal
of the trust company to comply with this request, and its threat
and intention
Page 170 U. S. 284
to pay said tax at once, voluntarily, which payment could not be
recovered if said law should hereafter be declared
unconstitutional.
The bill also alleged that such payment would result in waste of
the estate, and would be a breach of trust on the part of said
executor, to the irreparable loss an injury of the complainant;
that the alleged lien of the tax clouds the title to the real
property, and renders the same unmarketable, and that the act is in
conflict with the provisions of the Fourteenth Amendment.
The trust company answered, admitting the allegations of fact in
the bill but submitting the question of the constitutionality of
the law to the court, and praying to be advised of its rights and
duties in the premises as executor and trustee aforesaid and as an
officer of the court.
The county treasurer denied that the act was unconstitutional,
and admitted the allegations respecting the estate of the deceased,
the interest of the complainant therein, the lien of the
inheritance tax thereon, and the demand made therefor.
The cause was heard on bill and answers, and a decree was
entered dismissing the bill, from which an appeal was prayed to
this Court and allowed.
The act under which the taxes complained of were levied is
entitled "An act to tax gifts, legacies and inheritances in certain
cases and to provide for the collection of the same." Acts 1895, p.
301. It is only necessary to quote its first and second section,
which are as follows:
"§ 1. Be it enacted by the people of the State of Illinois,
represented in the General Assembly: all property, real, personal
and mixed which shall pass by will or by the intestate laws of this
state from any person who may die seized or possessed of the same
while a resident of this state or, if decedent was not a resident
of this state at the time of his death, which property or any part
thereof shall be within this state or any interest therein or
income therefrom, which shall be transferred by deed, grant, sale
or gift made in contemplation of the death of the grantor or
bargainor or intended to take effect in possession or enjoyment
after such death, to any
Page 170 U. S. 285
person or persons or to any body politic or corporate in trust
or otherwise, or by reason whereof any person or body politic or
corporate shall become beneficially entitled in possession or
expectation to any property or income thereof, shall be, and is,
subject to a tax at the rate hereinafter specified to be paid to
the treasurer of the proper county for the use of the state, and
all heirs, legatees and devisees, administrators, executors and
trustees shall be liable for any and all such taxes until the same
shall have been paid as hereinafter directed. When the beneficial
interest to any property or income therefrom shall pass to or for
the use of any father, mother, husband, wife child, brother,
sister, wife or widow of the son or the husband of the daughter, or
any child or children adopted as such in conformity with the laws
of the State of Illinois, or to any person to whom the deceased,
for not less than ten years prior to death, stood in the
acknowledge relation of a parent, or to any lineal descendant born
in lawful wedlock, in every such case, the rate of tax shall be one
dollar on every hundred dollars of the clear market value of such
property received by each person and at and after the same rate for
every less amount, provided that any estate which may be valued at
a less sum than twenty thousand dollars shall not be subject to any
such duty or taxes, and the tax is to be levied in above cases only
upon the excess of twenty thousand dollars received by each person.
When the beneficial interests to any property or income therefrom
shall pass to or for the use of any uncle, aunt, niece, nephew or
any lineal descendant of the same, in every such case, the rate of
such tax shall be two dollars on every one hundred dollars of the
clear market value of such property received by each person on the
excess of two thousand dollars so received by each person. In all
other cases, the rate shall be as follows: on each and every
hundred dollars of the clear market value of all property, and at
the same rate for any less amount; on all estates of ten thousand
dollars and less, three dollars; on all estates of over ten
thousand dollars and not exceeding twenty thousand dollars, four
dollars; on all estate over twenty thousand dollars and not
exceeding fifty thousand dollars, five dollars, and on
Page 170 U. S. 286
all estates over fifty thousand dollars, six dollars, provided
that an estate in the above case which may be valued at a less sum
than five hundred dollars shall not be subject to any duty or
tax."
"§. 2. When any person shall bequeath or devise any property or
interest therein or income therefrom to mother, father, husband,
wife, brother and sister, the widow of the son, or a lineal
descendant during the life or for a term of years or remainder to
the collateral heir of the decedent, or to the stranger in blood or
to the body politic or corporate at their decease, or on the
expiration of such term, the said life estate or estates for a term
of years shall not be subject to any tax, and the property so
passing shall be appraised immediately after the death at what was
the fair market value thereof at the time of the death of the
decedent in the manner hereinafter provided, and after deducting
therefrom the value of said life estate or term of years, the tax
transcribed by this act on the remainder shall be immediately due
and payable to the treasurer of the proper county, and, together
with the interests thereon, shall be and remain a lien on said
property until the same is paid, provided that the person or
persons or body politic or corporate beneficially interested in the
property chargeable with said tax elect not to pay the same until
they shall come into the actual possession or enjoyment of such
property, or in that case said person or persons or body politic or
corporate shall give a bond to the people of the State of Illinois
in the penalty three times the amount of the tax arising upon such
estate with such sureties as the county judge may approve,
conditioned for the payment of the said tax and interest thereon at
such time or period as they or their representatives may come into
the actual possession or enjoyment of said property, which bond
shall be filed in the office of the county clerk of the proper
county, provided further that such person shall make a full,
verified return of said property to said county judge, and file the
same in his office within one year from the death of the decedent,
and within that period enter into such securities and renew the
same for five years. "
Page 170 U. S. 287
Two other cases were argued and submitted with this case,
to-wit,
Drake v. Kochersperger, error to the Supreme Court
of the State of Illinois, and
Sawyer v. Same, error to the
Circuit Court of the United States for the Northern District of
Illinois.
In the
Drake case, the Supreme Court of the State of
Illinois sustained the statute as consonant with the constitution
of the state. 167 Ill. 122.
MR. JUSTICE McKENNA, after stating the case, delivered the
opinion of the Court.
Legacy and inheritance taxes are not new in our laws. They have
existed in Pennsylvania for over sixty years, and have been enacted
in other states. They are not new in the laws of other countries.
In
Tennessee v. Alston, 94 Tenn. 674, Judge Wilkes gave a
short history of them, as follows:
"Such taxes were recognized by the Roman law. 1 Gibbon's Decline
and Fall of the Roman Empire, pp. 163-164. They were adopted in
England in 1780, and have been much extended since that date.
Dowell's History of Taxation in England 148; Acts 20 Geo. III, c.
28, 45 Geo. III, c. 28, and 16 & 17 Vict. c. 51;
Green v.
Craft, 2 H.Bl. 30;
Hill v. Atkinson, 2 Merivale 45.
Such taxes are now in force generally in the countries of Europe.
Review of Reviews, February, 1893. In the United States, they were
enacted in Pennsylvania in 1826; Maryland, 1844; Delaware, 1869;
West Virginia,
Page 170 U. S. 288
1887, and still more recently in Connecticut, New Jersey, Ohio,
Maine, Massachusetts, 1891; Tennessee in 1891, chapter 25, now
repealed by chapter 174, Acts 1893. They were adopted in North
Carolina in 1846, but repealed in 1883; were enacted in Virginia in
1844, repealed in 1855, reenacted in 1863, and repealed in
1884."
Other states have also enacted them -- Minnesota, by
constitutional provision.
The constitutionality of the taxes has been declared, and the
principles upon which they are based explained, in
United
States v. Perkins, 163 U. S. 625,
163 U. S. 628;
Strode v. Commonwealth, 52 Penn.St. 181;
Eyre v.
Jacob, 14 Gratt. 422;
Schoolfield v. Lynchburg, 78
Va. 366;
Maryland v. Dalrymple, 70 Md. 298;
Clapp v.
Mason, 94 U. S. 587;
In re Merriam's Estate, 141 N.Y. 479;
Maine v.
Hamlin, 86 Me. 495;
Tennessee v. Alston, 94 Tenn.
674;
In re Wilmerding's Estate, 117 Cal. 281; Dos Passos
Collateral Inheritance Tax 20;
Minot v. Winthrop, 162
Mass. 113;
Gelsthorpe v. Furnell [Montana], 51 P. 267.
See also Scholey v.
Rew, 23 Wall. 331.
It is not necessary to review these cases or state at length the
reasoning by which they are supported. They are based on two
principles: 1. an inheritance tax is not one on property, but one
on the succession; 2. the right to take property by devise or
descent is the creature of the law, and not a natural right -- a
privilege -- and therefore the authority which confers it may
impose conditions upon it. From these principles it is deduced that
the states may tax the privilege, discriminate between relatives,
and between these and strangers, and grant exemptions, and are not
precluded from this power by the provisions of the respective state
constitutions requiring uniformity and equality of taxation.
The second principle was given prominence in the arguments at
bar. The appellee claimed that the power of the state could be
exerted to the extent of making the state the heir to everybody,
and the appellant asserted a natural right of children to inherit.
Of the former proposition we are not required to express an
opinion. Nor, indeed, of the latter, for appellant conceded that
testamentary disposition and inheritance
Page 170 U. S. 289
were subject to regulation. However, as pertinent to the
subject, decisions of this Court may be cited.
In
United States v. Fox, 94 U. S.
315,
94 U. S. 321, a
law of the State of New York confining devises to natural persons
and corporations created under its laws was considered, and a
devise of land to the United States was held void. The Court
said:
"The power of the state to regulate the tenure of real property
within her limits, and the modes of its acquisition and transfer,
and the rules of its descent, and the extent to which a
testamentary disposition of it may be exercised by its owners, is
undoubted. It is an established principle of law, everywhere
recognized, arising from the necessity of the case, that the
disposition of immovable property, whether by deed, descent, or by
any other mode, is exclusively subject to the government within
whose jurisdiction the property is situated.
McCormick v.
Sullivant, 10 Wheat. 202. . . . Statutes of wills,
as is justly observed by the court of appeals, are enabling acts,
and prior to the statute of 33 Henry VIII, there was no general
power at common law to devise lands. The power was opposed to the
feudal policy of holding lands inalienable without the consent of
the lord. The English statute of wills became a part of the law of
New York upon the adoption of her constitution in 1777, and, with
some modification in its language, remains so at this day. Every
person must therefore devise his lands in that state within the
limitations of the statute, or he cannot devise them at all. His
power is bounded by its conditions."
In
Mager v.
Grima, 8 How. 493, there was considered the
validity of a law of Louisiana imposing a tax of ten percent upon
legacies when the legatee was neither a citizen of the United
States, nor domiciled therein. Mr. Chief Justice Taney considered
the legal question of easy solution, and disposed of it summarily.
He said: "This is a plain case, and when the facts are stated, the
questions of law way be easily disposed of in a few words." After
stating the case briefly, he further said:
"Now the law in question is nothing more than an exercise of the
power, which every state and sovereignty possesses, of
Page 170 U. S. 290
regulating the manner and terms upon which property, real or
personal, within its dominion may be transmitted by last will and
testament or by inheritance, and of prescribing who shall and who
shall not be capable of taking it. Every state or nation may
unquestionably refuse to allow an alien to take either real or
personal property situated within its limits, either as heir or
legatee, and may, if it think proper, direct that property so
descending or bequeathed shall belong to the state. In many of the
states of this Union at this day, real property devised to an alien
is liable to escheat. And if a state may deny the privilege
altogether, it follows that when it grants it, it may annex to the
grant any conditions which it supposes to be required by its
interests or policy. This has been done by Louisiana. The right to
take has been given to the alien, subject to the deduction of ten
percent for the use of the state."
"In some of the states, laws have been passed at different times
imposing a tax similar to the one now in question upon its own
citizens as well as foreigners, and the constitutionality of these
laws has never been questioned. And if a state may impose it upon
its own citizens, it will hardly be contended that aliens are
entitled to exemption, and that their property in our own country
is not liable to the same burdens that may lawfully be imposed upon
that of our own citizens."
"We see no objection to such a tax, whether imposed on citizens
and aliens alike, or upon the latter exclusively."
In
United States v. Perkins, 163 U.
S. 625,
163 U. S. 631, the
inheritance tax law of the State of New York was involved. MR.
JUSTICE BROWN, speaking for this Court, said:
"While the laws of all civilized states recognize in every
citizen the absolute right to his own earnings, and the enjoyment
of his own property and the increase thereof during his life,
except so far as the state may require him to contribute his share
for public expenses, the right to dispose of his property by will
has always been considered purely a creature of statute, and within
legislative control."
"By the common law as it stood in the reign of Henry II, a man's
goods were to be divided into three equal parts, of which one went
to his
Page 170 U. S. 291
heirs or lineal descendants, another to his wife, and a third
was at his own disposal, or, if he died without a wife, he might
then dispose of one moiety, and the other went to his children, and
so,
e converso, if he had no children, the wife was
entitled to one moiety, and he might bequeath the other; but if he
died without either wife or issue, the whole was at his own
disposal."
"2 Bl.Com. 492."
"Prior to the statute of wills, enacted in the reign of Henry
VIII, the right to a testamentary disposition of the property did
not extend to real estate at all, and as to personal estate was
limited as above stated. Although these restrictions have long
since been abolished in England, and never existed in this country
except in Louisiana, the right of a widow to her dower, and to a
share in the personal estate, is ordinarily secured to her by
statute."
"By the Code of Napoleon, gifts of property, whether by acts
inter vivos or by will, must not exceed one-half the
estate if the testator leave but one child, one-third if he leaves
two children, and one-fourth if he leaves three or more. If he have
no children, but leaves ancestors, both in the paternal and
maternal line, he may give away but one-half of his property, and
but three-fourths if he have ancestors in but one line. By the law
of Italy, one-half of a testator's property must be distributed
equally among all his children. The other half he may leave to his
eldest son, or to whomsoever he pleases. Similar restrictions upon
the power of a disposition by will are found in the codes of other
continental countries, as well as in the State of Louisiana. Though
the general consent of the most enlightened nations has from the
earliest period recognized a natural right in children to inherit
the property of the parents, we know of no legal principle to
prevent the legislature from taking away or limiting the right of
testamentary disposition or imposing such conditions upon its
exercise as it may deem conducive to public good."
Against the cases sustaining inheritance taxes, and their
classifications and exemptions, appellants cite
State v.
Mann, 76 Wis. 469;
Minnesota v. Gorman, 40 Minn. 232;
Curry v. Spencer, 61 N.H. 624;
Ohio v. Ferris, 53
Ohio St. 314, and
Missouri v. Switzer, lately decided.
Page 170 U. S. 292
These cases are not in all points irreconcilable with those
first cited.
Curry v. Spencer is extreme. It was held that
an exception from an otherwise general inheritance law of legacies
to husband or wife, children or grandchildren, of the person who
died last seised offended the rigid uniformity of the constitution
of that state and its bill of rights. The court, however, said,
speaking by Blodgett, J.:
"It is not questioned that the power to tax is vested in the
legislature; that it is unrestricted except when opposed to some
provision of the federal or state constitution, and that it extends
to every trade or occupation, to every object of industry, use, or
enjoyment, and to every species of possession."
And quoting 2 Bl.Com. 12, he further said:
"Wills, and therefore testaments and rights of inheritances and
successions, are all of them creatures of the civil or municipal
laws, and accordingly are in all respects regulated by them."
In
Wisconsin v. Mann and
Minnesota v. Gorman,
the distinction between a tax on successions and one on property
was not necessary to observe.
Minnesota v. Gorman,
however, may be claimed as deciding that a tax based on the value
of the estates is contrary to the rule of equality; also, that
exemptions are.
Ohio v. Ferris and
Missouri v.
Switzer do not oppose the principles upon which inheritance
taxes are sustained, but only decide that the statutes passed on
were repugnant to equality and uniformity of taxation as prescribed
by the state constitutions. They are authority against the Illinois
statute. But it is not necessary to dwell on the points of
agreement of the cases. Our inquiry must be not what will satisfy
the provisions of the state constitutions, but what will satisfy
the rule of the federal Constitution. The power of the states over
successions may be as plenary in the abstract as appellees contend
for. Nevertheless it must be exerted within the limitations of that
Constitution. If the power of devise or of inheritance be a
privilege, it must be conferred or regulated by equal laws.
This brings us to the law in controversy. The appellant attacks
both its principles and its provisions -- its principles as
necessarily arbitrary, and its provisions as causing
discriminations and creating inequality in the burdens of
taxation.
Page 170 U. S. 293
Is the act open to this criticism? The clause of the Fourteenth
Amendment especially invoked is that which prohibits a state
denying to any citizen the equal protection of the laws. What
satisfies this equality has not been, and probably never can be,
precisely defined. Generally it has been said that it
"only requires the same means and methods to be applied
impartially to all the constituents of a class, so that the law
shall operate equally and uniformly upon all persons in similar
circumstances."
Kentucky Railroad Tax Cases, 115 U.
S. 321. It does not prohibit legislation which is
limited either in the objects to which it is directed, or by the
territory within which it is to operate. It merely requires that
all persons subjected to such legislation shall be treated alike
under like circumstances and conditions, both in the privilege
conferred and the liabilities imposed.
Hayes v. Missouri,
120 U. S. 68.
Similar citations could be multiplied. But what is the test of
likeness and unlikeness of circumstances and conditions? These
expressions have almost the generality of the principle they are
used to expound, and yet they are definite steps to precision and
usefulness of definition when connected with the facts of the cases
in which they are employed. With these for illustration, it may be
safely said that the rule prescribes no rigid equality, and permits
to the discretion and wisdom of the state a wide latitude as far as
interference by this Court is concerned. Nor with the impolicy of a
law has it concern. Mr. Justice Field said, in
Mobile v.
Kimball, 102 U. S. 704,
that this Court is not a harbor in which can be found a refuge from
ill-advised, unequal, and oppressive state legislation. And he
observed in another case: "It is hardly necessary to say that
hardship, impolicy. or injustice of state laws is not necessarily
an objection to their constitutional validity."
The rule therefore is not a substitute for municipal law. It
only prescribes that that law have the attribute of equality of
operation, and equality of operation does not mean indiscriminate
operation on persons, merely as such, but on persons according to
their relations. In some circumstances, it may not tax A more than
B; but, if A be of a different trade or
Page 170 U. S. 294
profession than B, it may. And in matters not of taxation, if A
be a different kind of corporation than B, it may subject A to a
different rule of responsibility to servants than B,
Missouri
Pacific Railway v. Mackey, 127 U. S. 205, and
to a different measure of damages than B,
Minneapolis & St.
Louis Railway v. Beckwith, 129 U. S. 26. And
it permits special legislation in all of its varieties.
Missouri Pacific Railway v. Mackey, 127 U.
S. 205;
Minneapolis & St. Louis Railway v.
Herrick, 127 U. S. 210;
Duncan v. Missouri, 152 U. S. 377.
In other words, the state may distinguish, select, and classify
objects of legislation, and necessarily this power must have a wide
range of discretion. It is not without limitation, of course.
"Clear and hostile discriminations against particular persons
and classes, especially such as are of unusual character, unknown
to the practice of our governments, might be obnoxious to the
constitutional prohibition,"
said Mr. Justice Bradley in
Bell's Gap Railroad v.
Pennsylvania, 134 U. S. 232,
134 U. S. 240.
And MR. JUSTICE BREWER, in
Gulf, Colorado & Santa Fe
Railway v. Ellis, 165 U. S. 150,
after a careful consideration of many cases, said:
"It is apparent that the mere fact of classification is not
sufficient to relieve a statute from the reach of the equality
clause of the Fourteenth Amendment, and that in all cases it must
appear not only that a classification has been made, but also that
it is one based upon some reasonable ground -- some difference
which bears a just and proper relation to the attempted
classification, and is not a mere arbitrary selection."
Two principles therefore must be reconciled in the Illinois
inheritance law if it is to be sustained -- the equality of
protection of the laws guarantied by the Fourteenth Amendment and
the power of the state to classify persons and property. The latter
principle needs further consideration. What test is there of the
reasonableness of a classification -- of one based upon "some
difference which bears a just and proper relation to the attempted
classification, and is not a mere arbitrary selection"? Legislation
special in character is not forbidden by it, as we have seen.
Treating mechanics as a class, and
Page 170 U. S. 295
giving them a lien for the amount of their work, has been held
reasonable. Charging a railroad corporation, and not other
corporations or persons, with an attorney's fee, has been held
unreasonable, yet the former would seem to be as much an exclusive
favor as the latter an exclusive burden.
Of taxation, and the case at bar is of taxation, Mr. Justice
Bradley said in
Bell's Gap R. Co. v. Pennsylvania, supra,
and MR. CHIEF JUSTICE FULLER in
Giozza v. Tiernan,
148 U. S. 657,
that the Fourteenth Amendment was not intended to compel the state
to adopt an iron rule of equal taxation. The range of the state's
power was expressed by Mr. Justice Bradley as follows:
"It may, if it chooses, exempt certain classes of property from
any taxation at all, such as churches, libraries, and the property
of charitable institutions. It may impose different specific taxes
upon different trades and professions, and vary the rates of excise
upon various products. It may tax real estate and personal property
in a different manner. It may tax visible property only, and not
tax securities for payment of money. It may allow deductions for
indebtedness or not allow them. All such regulations and those of
like character, so long as they proceed within reasonable limits
and general usage, are within the discretion of the state
legislature or the people of the state framing their
Constitution."
And so Mr. Justice Miller, speaking for the Court in
Davidson v. New Orleans, 96 U. S. 97. said:
"The federal Constitution imposes no restraints on the state in
regard to unequal taxation."
The Court, through Mr. Justice Lamar, in
Pacific Express Co.
v. Seibert, 142 U. S. 339, was
equally emphatic. He said on page
142 U. S.
351:
"This Court has repeatedly laid down the doctrine that diversity
of taxation, both with respect to the amount imposed and the
various species of property selected either for bearing its
burdens, or from being exempt from them, is not inconsistent with a
perfect uniformity and equality of taxation, in the proper sense of
those terms, and that a system which imposes the same tax upon
every species of property, irrespective of its nature or condition
or class, will be destructive
Page 170 U. S. 296
of the principles of uniformity and equality in taxation, and of
a just adaptation of property to its burdens."
And it was said in
Merchants' Bank v. Pennsylvania,
167 U. S. 461:
"Indeed, this whole argument of a right under the federal
Constitution to challenge the tax law on the ground of inequality
in the burdens resulting from the operation of the law is put at
rest by the decision in
Bell's Gap Railroad v.
Pennsylvania."
There is therefore no precise application of the rule of
reasonableness of classification, and the rule of equality permits
many practical inequalities. And necessarily so. In a
classification for governmental purposes, there cannot be an exact
exclusion or inclusion of persons and things. Bearing these
considerations in mind, we can solve the questions in
controversy.
There are three main classes in the Illinois statute; the first
and second being based, respectively, on lineal and collateral
relationship to the testator or interstate, and the third being
composed of strangers to his blood and distant relatives. The
latter is again divided into four subclasses, dependent upon the
amount of the estate received. The first two classes therefore
depend on substantial differences; differences which may
distinguish them from each other, and them or either of them from
the other class; differences therefore which "bear a just and
proper relation to the attempted classification" -- the rule
expressed in
Gulf, Colorado & Santa Fe Railway v.
Ellis, 165 U. S. 150. And
if the constituents of each class are affected alike, the rule of
equality prescribed by the cases is satisfied. In other words, the
law operates "equally and uniformly upon all persons in similar
circumstances."
But the appellant asserts discrimination, and claims that the
exemptions produce the greatest inequality. As stated above, the
Supreme Court of the State of Illinois passed on and sustained the
law in the
Drake case, and, claiming the opinion for
support, the appellant contends that there are two distinct systems
and principles applied in the act -- the one basing the tax on the
amount received or the value of the
Page 170 U. S. 297
privilege of succession, the other basing the tax upon the
estate owned by the decedent irrespective of the amount or value of
the legacy. And discriminations hence resulting, or rather which
are claimed as hence resulting, are detailed.
We, however, do not read the opinion as counsel do. In answer to
the objection that the statute offended against uniformity or
proportion to valuation as prescribed by the Constitution of
Illinois, the court said:
"That statute provides certain classes of property which was a
part of an estate shall be exempt from taxation under these
provisions, and when the legislature provides other classes of
property, some of which shall pay one dollar per hundred, others
two, others three, and others four, and still others five, and
again others six dollars, per hundred, six different classes are
created, under and by which a tax is levied by valuation on the
right of succession to a separate class of property."
"The class on which a tax is thus levied is general, uniform,
and pertains to all species of property included within that class.
A tax which affects the property within a specific class is uniform
as to the class, and there is no provision of the constitution
which precludes legislative action from assessing tax on that
particular class. By this act of the legislature, six classes of
property are created heretofore absolutely unknown.
It is those
classes of property depending upon the estate owned by one dying
possessed thereof which the state may regulate as to its descent
and the right to devise. The tax assessed on classes thus
created is absolutely uniform on the classes upon which it
operates, and, under the provisions of the statute, is to be
determined by valuation, so that every person and corporation shall
pay a tax in proportion to the value of his, her, or its property
inherited, and it is not inconsistent with the principle of
taxation fixed by the constitution, and is clearly within the
sections of the constitution quoted. No want of uniformity with one
living who owns property can be urged as a reason why the statute
makes an inconsistent rule. No person inherits property, or can
take by devise, except by the statute, and the state, having power
to regulate this question,
Page 170 U. S. 298
may create classes, and provide for uniformity with reference to
classes which were before unknown."
The words which we have italicized are urged to support
appellant's contention, but it is manifest that they do not do so
when considered in relation to that which precedes and follows
them, and it is therefore the estates which descend or are received
which the court decides are new property, and which are to pay a
tax in proportion to their value.
Appellant, however, says:
"The progression is likewise unnecessarily arbitrary if we take
the view that the tax is levied on the amount received. . . . Under
such an assumption, those taking the larger amounts are required to
pay a larger rate on the same sums upon which those taking smaller
sums pay a smaller rate -- that is to say, one who receives a
legacy of $10,000 pays 3 percent, or $300, thus receiving $9,700
net, while one receiving a legacy of $10,001 pays 4 percent on the
whole amount, or $400.04, thus receiving $9,600.96 -- $99.04 less
than the one whose legacy was actually one dollar less valuable.
This method is applied throughout the class. Other examples might
be stated."
The reasoning of appellant is based on the view that the tax is
one on property, instead of one on the succession, as held by the
supreme court of the state. Being on the succession, the court
further held, as we have seen, that the latter is to be regarded as
new property, and the $20,000 and other property not taxed are not,
therefore, exemptions.
In this view, the Illinois court is in harmony with the majority
of other courts of the country. We concur in the reasoning. It is
true that the amount of the exemption is greater in the Illinois
law than in any other, but the right to exempt cannot depend on
that. Whether it shall be $20,000, as in Illinois law, or $10,000,
as in that of Massachusetts, or other amounts as in other laws,
must depend upon the judgment of the legislature of each state, and
cannot be subject to judicial review. If such review could
ascertain the factors of judgment, and could apply them with
indisputable wisdom to the different conditions existing, it would
be outside of its province to do so. That, manifestly, is a
legislative, not a judicial, function.
Page 170 U. S. 299
The first and second cases, therefore, of the statute depend on
substantial distinctions, and their classifications are not
arbitrary. Nor do the exemptions of the statute render its
operation unequal within the meaning of the Fourteenth
Amendment.
"The right to make exemptions is involved in the right to select
the subjects of taxation and apportion the public burdens among
them, and must consequently be understood to exist in the lawmaking
power wherever it has not in terms been taken away. To some extent
it must exist always, for the selection of subjects of taxation is
of itself an exemption of what is not selected."
Cooley on Taxation 200.
See also the remarks of Mr.
Justice Bradley in
Bell's Gap Railroad v. Pennsylvania,
134 U. S. 232.
The provisions of the statute in regard to the tax on legacies
to strangers to the blood of an intestate need further comment.
These provisions are as follows:
"On each and every hundred dollars of the clear market value of
all property and at the same rate for any less amount; on all
estates of ten thousand dollars and less, three dollars; on all
estates of over ten thousand dollars and not exceeding twenty
thousand dollars, four dollars; on all estates over twenty thousand
dollars and not exceeding fifty thousand dollars, five dollars, and
on all estates over fifty thousand dollars, six dollars, provided
that an estate in the above case which may be valued at a less sum
than five hundred dollars shall not be subject to any duty or
tax."
There are four classes created, and manifestly there is equality
between the members of each class. Inequality is only found by
comparing the members of one class with those of another. It is
illustrated by appellant as follows: one who receives a legacy of
$10,000 pays 3 percent, or $300, thus receiving $9,700 net, while
one receiving a legacy of $10,001 pays 4 percent on the whole
amount, or $400.04, thus receiving $9,600.96, or $99.04 less than
the one whose legacy was actually $1 less valuable. This method is
applied throughout the class.
These, however, are conceded to be extreme illustrations, and we
think therefore that they furnish no test of the
Page 170 U. S. 300
practical operation of the classification. When the legacies
differ in substantial extent, if the rate increases, the benefit
increases to greater degree.
If there is unsoundness, it must be in the classification. The
members of each class are treated alike -- that is to say, all who
inherit $10,000 are treated alike -- all who inherit any other sum
are treated alike. There is equality, therefore, within the
classes. If there is inequality, it must be because the members of
a class are arbitrarily made such, and burdened as such, upon no
distinctions justifying it. This is claimed. It is said that the
tax is not in proportion to the amount, but varies with the amounts
arbitrarily fixed, and hence that an inheritance of $10,000 or less
pays 3 percent, and that one over $10,000 pays, not 3 percent on
$10,000, and an increased percentage on the excess over $10,000,
but an increased percentage on the $10,000 as well as on the
excess, and it is said, as we have seen, that in consequence, one
who is given a legacy of $10,001 by the deduction of the tax
receives $99.04 less than one who is given a legacy of $10,000. But
neither case can be said to be contrary to the rule of equality of
the Fourteenth Amendment. That rule does not require, as we have
seen, exact equality of taxation. It only requires that the law
imposing it shall operate on all alike, under the same
circumstances. The tax is not on money; it is on the right to
inherit, and hence a condition of inheritance, and it may be graded
according to the value of that inheritance. The condition is not
arbitrary because it is determined by that value; it is not unequal
in operation because it does not levy the same percentage on every
dollar -- does not fail to treat "all alike under like
circumstances and conditions, both in the privilege conferred and
the liabilities imposed." The jurisdiction of courts is fixed by
amounts. The right of appeal is. As was said at bar, the Congress
of the United States has classified the right of suitors to come
into the United States courts by amounts. Regarding these alone,
there is the same inequality that is urged against classification
of the Illinois law. All license laws and all specific taxes have
in them an element of inequality; nevertheless,
Page 170 U. S. 301
they are universally imposed, and their legality has never been
questioned. We think the classification of the Illinois law was in
the power of the legislature to make, and the decree of the circuit
court is
Affirmed.
MR. JUSTICE BREWER, dissenting.
I am unable to concur in the foregoing opinion so far as it
sustains the constitutionality of that part of the law which grades
the rate of the tax upon legacies to strangers by the amount of
such legacies. If this were a question in political economy, I
should not dissent, but it is one of constitutional limitations.
Equality in right, in protection, and in burden is the thought
which has run through the life of this nation, and its
constitutional enactments, from the Declaration of Independence to
the present hour. Of course, absolute equality is not attainable,
and the fact that a law, whether tax law or other, works inequality
in its actual operation does not prove its unconstitutionality.
Merchants' Bank v. Pennsylvania, 167 U.
S. 461. But when a tax law directly, necessarily, and
intentionally creates an inequality of burden, it then becomes
imperative to inquire whether this inequality thus intentionally
created can find any constitutional justification.
That this is a law imposing taxes is not open to question. The
title of the act is, "An act to tax gifts, legacies," etc., and the
first section provides that "all property . . . which shall pass by
will or by the intestate laws of this state . . . shall be, and is,
subject to a tax at the rate hereinafter specified." Classifying
inheritors and legatees into the three classes of near relatives,
remote relatives, and strangers, and imposing a different rate of
taxation as to each of these classes, may not be objectionable. The
classification is based upon differences which bear just and proper
relation to it, and where classification is rightful, differences
in the rate of taxation may be, so far as the federal Constitution
is concerned, permissible. But beyond this classification, the
statute provides that as to the third class (that is, strangers),
the rate of taxation shall vary with the amount of the estate. In
other
Page 170 U. S. 302
words, the actual tax to be paid does not increase simply as the
legacy increases, which would be the rule of equality, but the rate
of taxation is also increased as the amount of the legacy passes
from one sum to another. Upon a legacy over $50,000 it is six
percent, while upon one under $10,000 it is only three percent
It seems to be conceded that if this were a tax upon property,
such increase in the rate of taxation could not be sustained; but,
being a tax upon the succession, it is held that a different rule
prevails. The argument is that because the state may regulate
inheritances and the extent of testamentary disposition, it may
impose thereon any burdens, including therein taxes, and impose
them in any manner it chooses. There are doubtless some matters
over which the state has purely arbitrary power. For instance, it
is under no obligations to grant any charters, and the legislature
may undoubtedly, in giving a charter to one set of persons, impose
one series of burdens, and in granting a similar charter to another
set may impose entirely different burdens. But these are cases of
mere gratuities, mere favors and privileges, and any donor of such
may add to them the burdens he pleases. But I do not understand
that legacies and inheritances stand upon the same footing. True,
the state may regulate, but it has no arbitrary power in the
matter. The property of a decedent does not, at his death, become
the property of the state, nor subject to its disposal according to
any mere whim or fancy. And yet, if it is a purely arbitrary power,
I do not see what constitutional objection could be raised to any
disposition which a legislature might make of the property of any
decedent. Take the illustration made by counsel for appellant:
could the Legislature of Illinois, which passed this statute,
constitutionally enact that the estate of every person dying within
the limits of the state should be given to the members of that
legislature? Or, if the matter of personal benefit be interposed as
against the validity of such legislation, could it enact that the
property of A, on his death, should pass to the state, the property
of B to some religious or charitable institution, and the property
of C be divided
Page 170 U. S. 303
among his children? Can there be a doubt that such inequality of
legislation would vitiate it? But whatever may be the power of the
legislature, Illinois had regulated the matter of descents and
distributions, and had granted the right of testamentary
disposition. And now, by this statute, upon property passing in
accordance with its statutes, a tax is imposed -- a tax unequal
because not proportioned to the amount of the estate, unequal
because based upon a classification purely arbitrary, to-wit, that
of wealth, a tax directly and intentionally made unequal. I think
the Constitution of the United States forbids such inequality.